On May 28, 2016, Pesky Corporation acquired all of the outstanding common stock

Question

On May 28, 2016, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $430 million. The fair value of Harman's identifiable tangible and intangible assets totaled $519 million, and the fair value of liabilities assumed by Pesky was $150 million.

     Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2016. Management has provided the following information:

Determine the amount of goodwill that resulted from the Harman acquisition. (Enter your answer in millions (i.e., 10,000,000 should be entered as 1

Determine the amount of goodwill impairment loss that Pesky should recognize at the end of 2016, if any. (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).)

If an impairment loss is required, prepare the journal entry to record the loss. (If no entry is required for an event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

On May 28, 2016, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $430 million. The fair value of Harman's identifiable tangible and intangible assets totaled $519 million, and the fair value of liabilities assumed by Pesky was $150 million.

     Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2016. Management has provided the following information:

Explanation / Answer

1 goodwill that resulted from the Harman acquisition Good will = Purchase price - (Fair market value of total Assets - Fair value of Liabilities Good will =$430 Million -($519 Millions - $150 Millions ) =$61 Millions (2) Impairment Loss determination of impiled goodwill fair value of harman $410 Millions Less:fair value of harmans excluding Good will $370 Millions Implied value of goodwill $40 Millions Impairment loss Book value of good will $61 Millions Implied Value of good will $40 Millions Impairment Loss $21 Millions 3 Journal Entry for Impairment Loss Debit Credit Loss on impairment of Goodwill A/c $21 Millions            To Goodwill A/c $21 Millions (Being Loss on impairment of goodwill has been recorded)

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