On January 1, 2010, P Companyacquired the net assets of S Companyfor $1,580,000 cash. The fair value of SCo. identifiable net assets was$1,310,000 on this date. P Companydecided to measure goodwillimpairment using the present value offuture cash flows to estimate the fairvalue of the reporting unit (S Co.). Theinformation for these subsequent yearsis as follows:Carrying value ofS Co. IdentifiableNet Assets$1,160,000$1,120,000Fair ValueSCo. IdentifiableNet Assets$1,190,000$1,210,000Present valueof Future Cash Flows$1,390,000$1,400,000* Identifiable net assets do not include goodwill.Year20112012Choose the correct answer:In year 2011 S Company had: *Excess of fair value over carryingvalue of $30,000Excess of carrying value over fairvalue of $30,000Excess of fair value over carryingvalue of $40,000Excess of carrying value over fairvalue of $40,000None of the options is correct

During the year 2011 Fair Value of S Co. Identifiable Net Assets (A) = $ 1,190,000 Carrying Amount…

On January 1, 2010, P Company acquired the net assets of S Company for $1,580,000 cash. The fair value of S Co. identifiable net assets was $1,310,000 on this date. P Company decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting unit (S Co.). The information for these subsequent years is as follows: Carrying value of S Co. Identifiable Net Assets $1,160,000 $1,120,000 Fair Value SCo. Identifiable Net Assets Present value of Future Cash Flows $1,390,000 $1,400,000 Year 2011 $1,190,000 2012 $1,210,000 * Identifiable net assets do not include goodwill. Choose the correct answer: In year 2011 S Company had: *

On January 1, 2010, P Company acquired the net assets of S Company for $1,580,000 cash. The fair value of S Co. identifiable net assets was $1,310,000 on this date. P Company decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting unit (S Co.). The information for these subsequent years is as follows: Carrying value of S Co. Identifiable Net Assets $1,160,000 $1,120,000 Fair Value SCo. Identifiable Net Assets Present value of Future Cash Flows $1,390,000 $1,400,000 Year 2011 $1,190,000 2012 $1,210,000 * Identifiable net assets do not include goodwill. Choose the correct answer: In year 2011 S Company had: *

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter10: Measuring Exposure To Exchange Rate Fluctuations

Section: Chapter Questions

Problem 2BIC

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