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On May 31 2011 Talker Company a US company paid US$4,000000to acquire all of the common stock of Shayden Corporation anAustralian company which now became a division of Talker Shaydenreported

On May 31 2011 Talker Company a US company paid US$4,000000to acquire all of the common stock of Shayden Corporation anAustralian company which now became a division of Talker Shaydenreported

On May 31, 2011, Talker Company (a US company) paid US$4,000,000to acquire all of the common stock of Shayden Corporation (anAustralian company), which now became a division of Talker. Shaydenreported the following US$ balance sheet at the time of theacquisition:

 

Book Value $

Fair Value $

 

Current Assets

900,000

1,500,000

 

Noncurrent Assets

2,700,000

2,300,000

 

Current liabilities

(600,000)

(700,000)

 

Long-term liabilities

(500,000)

(400,000)

 

 

 

 

 

At December 31, 2011, Shayden reports the following US$ balancesheet information:

 

 

 

 

 

Book Value $

Fair Value $

 

Current Assets

800,000

400,000

 

Noncurrent Assets (excluding Goodwill)

1,500,000

1,100,000

 

Current liabilities

(700,000)

(700,000)

 

Long-term liabilities

(500,000)

(400,000)

 

       

During the annual impairment test conducted on December 31,2011, it was determined that the fair value of the Shayden divisionas a whole would be equal to the present value (using a discountrate of 10%) of the following estimated future cash follows:

December 31, 2012

December 31, 2013

December 31, 2014

December 31, 2015

December 31, 2016

$265,000

$265,000

$265,000

$265,000

$265,000

Required:

Compute the amount of goodwill recognized, if any, on5/31/11.

Determine the implied fair value of goodwill on 12/31/11.

Determine the goodwill impairment loss, if any, to be recordedon 12/31/11.

On the assumption that the fair value of Shayden on December 31,2010 was $1,800,000 (instead of using present values), determinethe goodwill impairment loss, if any, to be recorded.

 
mahesh 24-Mar-2020

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