Reference no: EM13169502

Albers Company acquires an 80% interest in Barker

Company on January 1, 2011, for $850,000. The following determination and distribution of

excess schedule is prepared at the time of purchase:

Determination and Distribution of Excess Schedule

Company Parent NCI

Implied Fair Price Value

Value (80%) (20%)

Fair value of subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,062,500 $850,000 $212,500

Less book value of interest acquired:

Total equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 600,000 $600,000 $600,000

Interest acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80% 20%

Book value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %u2026.. $480,000 $120,000

Excess of fair value over book value . . . . . . . . . . . . . . . . .. $ 462,500 $370,000 $ 92,500

Adjustment of identifiable accounts:

Adjustment Amortization Worksheet

per Year Life Key

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200,000 $ 10,000 20 debit D1

Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262,500 debit D2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 462,500

Albers uses the simple equity method for its investment in Barker. As of December 31,

2015, Barker has earned $200,000 since it was purchased by Albers. Barker pays no dividends

during 2011%u20132015.

On December 31, 2015, the following values are available:

Fair value of Barker%u2019s identifiable net assets (100%) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 900,000

Estimated fair value of Barker Company (net of liabilities) . . . . . . . . . . . . . . . . . . . . . 1,000,000

Determine if goodwill is impaired. If not, explain your reasoning. If so, calculate the loss on impairment.