At what amount should Loro Piana identifiable net assets

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Question - On July 8, 2013 LVMH purchased 80% of Loro Piana (luxury Italian cashmere brand) for $2.8 billion. The fair value of Loro Piana's identifiable assets and liabilities on that date were as follows:

Current Assets 500

Brand 1,500

Fixed Assets 1,000

Liabilities 1,300

At the end of 2015 the book value of Loro Piana had risen to $3.8 billion due to favorable conditions. However, in 2016 Loro Piana suffered a steep decline in sales due to decreased demand of the Asian market. At the end of 2016, LVMH top executives estimated the recoverable amount of Loro Piana to be $2.7 billion.

Required - At what amount should Loro Piana's identifiable net assets and goodwill be reported on LVMH's consolidated financial statements at the end of 2016? Assume that the amount of Loro Piana's goodwill did not change since the acquisition date.

Reference no: EM132773382

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