Reference no: EM132747825
Question: Anton Company acquired the net assets of Hair Company on January 1, 2021, for $672,000. The fair value of Anton's net assets was $530,000. Using a business valuation model, the estimated value of Anton Company was $565,000 immediately after the acquisition.
1. What amount of goodwill was recorded by Anton Company when it acquired Hair Company?
2. Using the information above, answer the questions posed in the following three independent situations:
a. On December 31, 2022, there were indications that goodwill might have been impaired. The fair value of the net assets, exclusive of goodwill, was estimated to be $505,000. The value of the business was estimated to be $534,000. On Dec. 31, 2022, the existing recorded book value of Anton Company's net assets, including goodwill, was $620,000. Is goodwill impaired? If so, what adjustment is needed? Prepare the journal entry, if needed.
b. On December 31, 2023, there were indications that goodwill might have been impaired. At that time, the existing recorded book value of Anton Company's net assets, including goodwill, was $651,000. The fair value of the net assets, exclusive of goodwill, was estimated to be $496,000. The value of the business was estimated to be $576,000. Is goodwill impaired? If so, what adjustment is needed? Prepare the journal entry, if needed.
c. On December 31, 2024, there were indications that goodwill might have been impaired. At that time, the existing recorded book value of Anton Company's net assets, including goodwill, was $648,000. The value of the business was estimated to be $632,000. The fair value of the net assets, exclusive of goodwill, was estimated to be $475,000. Is goodwill impaired? If so, what adjustment is needed? Prepare the journal entry, if needed.
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