Reference no: EM13504944
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.