Rosley Inc. currently has goodwill recorded on its books in the amount of $15,00
ID: 2450447 • Letter: R
Question
Rosley Inc. currently has goodwill recorded on its books in the amount of $15,00,000.
Information regarding Rosley’s two divisions follows:
Fine jewelry division
Budget accessory division
Book value of goodwill
$2,500,000
$12,500,000
Fair value of division
26,000,000
37,000,000
Book value of division
31,000,000
45,000,000
Fair value of identifiable net assets
24,500,000
23,000,000
Assume the company bypasses the Step 0 qualitative assessment.
Determine the following:
a) Is goodwill impaired for either division during 2016?
b) Which division(s)?
c) How much?
Fine jewelry division
Budget accessory division
Book value of goodwill
$2,500,000
$12,500,000
Fair value of division
26,000,000
37,000,000
Book value of division
31,000,000
45,000,000
Fair value of identifiable net assets
24,500,000
23,000,000
Explanation / Answer
(a) YES GOODWILL IS IMPAIRED DURING 2016
(b)FOR BOTH THE DIVISIONS
(c)BY$75,00,000 AND $3,30,00,000 FOR FINE JEWELLERY AND BUDGET ACCESSORY DIVISION RESPECTIVELY.
FINE JEWELLERY DIVISION($) BUDGET ACCESSORY DIVISION($) BOOK VALUE OF GOODWILL 25,00,000 1,25,00,000 FAIR VALUE OF DIVISION 2,60,00,000 3,70,00,000 BOOK VALUE OF DIVISION 3,10,00,000 4,50,00,000 FAIR VALUE OF IDENTIFIABLE NET ASSETS 2,45,00,000 2,30,00,000 GOODWILL=FAIR VALUE OF DIVISION - BOOK VALUE OF DIVISION (50,00,000) (80,00,000) IMPAIRMENT OF GOODWILL 75,00,000 3,30,00,000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.