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# 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

#### Solution Preview

* 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

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