Share
Explore BrainMass

goodwill arising from a recent business combination

* Reporting Unit C is assigned $200,000 of goodwill arising from a recent business combination. The current carrying value of its net assets is $400,000 and the current fair value of its net assets, excluding goodwill, is $350,000. The fair value of the reporting unit is estimated to be $380,000. The amount of the impairment loss is:
a. $150,000
b. $170,000
c. $180,000
d. $200,000
e. None of the above

The next two questions refer to the following:
Assume that P Company purchases 10 percent of S Company's common stock for $50,000 at the beginning of the year. During the year, S has net income of $25,000 and pays dividends of $10,000.

* The entry recorded by P for the purchase of S' common stock includes which of the following:
a. A debit to Cash for $50,000
b. credit to Investment in S Company Common Stock for $50,000
c. credit to Cash for $50,000
d. debit to Cash for $10,000
e. None of the above

* The entry recorded by P for the receipt of dividend income from S Company includes which of the following:
a. A credit to Cash for $1,000
b. A debit to Cash for $10,000
c. A debit to Dividend Income for $1,000
d. debit to Cash for $1,000
f. None of the above

Attachments

Solution Preview

Please see the attached file.

* Reporting Unit C is assigned $200,000 of goodwill arising from a recent business combination. The current carrying value of its net assets is $400,000 and the current fair value of its net assets, excluding goodwill, is $350,000. The fair value of the reporting unit is estimated to be $380,000. The amount of the impairment loss is:
a. $150,000
b. $170,000
c. $180,000
d. $200,000
e. None of the above

Since the estimated fair value of the reporting unit is less than the current carrying value of ...

Solution Summary

The solution explains some multiple choice questions in accounting

$2.19