What was the amount of the impairment in goodwill

Assignment Help Financial Accounting

Reference no: EM132663614

On June 21, 2011, ZAGG acquired iFrogz for $96.2 million. The excess of the acquisition price over the fair value of iFrogz's net assets (i.e., tangible assets and identifiable intangible assets, net of assumed liabilities) was $6.925 million which was recorded as "goodwill" at the time of the acquisition.

Problem i. For book purposes, both US GAAP (ASC 350) and International Accounting Standard (IAS 36) do not allow for the amortization of goodwill, but require that goodwill be tested annually for impairment. In Note 7, ZAGG discloses that it conducted a goodwill impairment analysis during the fourth quarter of 2012. What was the amount of the impairment in goodwill that resulted from this analysis in 2012?

Problem ii. For tax purposes, goodwill is allowed to be amortized annually and is, therefore, a deductible expense in a company's tax return. ZAGG amortizes goodwill over a period of 15 years. Note 8 reports a deferred income tax asset of $1,801,000 related to goodwill at December 31, 2012. Explain how goodwill created a deferred income tax asset for ZAGG. Show how ZAGG arrived at this number. You may assume a 35% federal statutory tax rate and a 3% blended state statutory tax rate and that ZAGG began amortizing goodwill for tax purposes starting in July, 2011. [Hint: determine the net (i.e., after amortization) value of goodwill for tax purposes to compare to the net book value of goodwill]

Reference no: EM132663614

Questions Cloud

What ways can the balance sheet be expanded : What ways can the balance sheet and income statement be expanded to determine profit and financial position? Have included my income statement

What type of tax imposed on Sunset : What type of tax imposed on Sunset is associated with its investment income? Is the receipt of this investment income likely to result

Advantages and disadvantages of apriori algorithm : What are the possible advantages and disadvantages of Apriori Algorithm?

Explain your motivation for addressing the problem : Consider the problem you have decided on for your action research project (Students retention problem in higher educational institutions across America).

What was the amount of the impairment in goodwill : On June 21, 2011, ZAGG acquired iFrogz for $96.2 million. What was the amount of the impairment in goodwill that resulted from this analysis in 2012?

What is the most important thing you learned : Respond to the following in a minimum of 175 words: What is the most important thing you learned? The response must be typed.

Make balance scoreboard for iaa for november : Make balance scoreboard for IAA for November 2017 with calculated key performance indicators presented in two columns for planned performance

Evaluating cloud-based collaborative solution : List some of the questions that an organization should consider when evaluating a cloud-based collaborative solution

Calculate depreciation tax shield for project in year : Assume a tax rate of 21 percent and a discount rate of 12 percent. Calculate the depreciation tax shield for this project in year 3.

User Account

All Pages