Answer:
Goodwill impairment occurs when a company decides to pay more than book value for the acquisition of an asset.
An impairment is recognized as a loss on the income statement and as a reduction in the goodwill account. The amount of the loss is the difference between the current fair market value of the asset and its carrying value or amount.
Explanation:
Answer:
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Answer:
$0
Explanation:
Since Mr. A already owns 75% of common stock (and 85% of nonvoting stock), the extra 5% will result in a total of 80% (and 90%), that means that he cannot recognize any loss or gain resulting from this transaction. This applies to all stockholders that own at least 80% of a company's stocks and transfer property in exchange for more stocks.
Answer:
The answer is c. Equipment: 87,200; Gain/(loss): (15,500).
Explanation:
Since the exchange has commercial substance,
- Fair value of the equipment is equal to: Fair value of the land - Cash consideration receipt = 89,900 - 2,700 = $87,200.
- The disposal of land in the Balance sheet following the exchange needs to account for the differences between Book value of land and Fair value of land. Since Fair value is now smaller than Book Value, a Loss has to be recognized at the amount calculated as (Fair value - Book value) = (89,900 - 105,400) = $(15,500).
Thus, the answer is c. $87,200 $(15,500).
