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: *
Chapter10: Measuring Exposure To Exchange Rate Fluctuations
Section: Chapter Questions
Problem 2BIC
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Question
![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
$1,190,000
$1,210,000
Present value
of Future Cash Flows
$1,390,000
$1,400,000
* Identifiable net assets do not include goodwill.
Year
2011
2012
Choose the correct answer:
In year 2011 S Company had: *
Excess of fair value over carrying
value of $30,000
Excess of carrying value over fair
value of $30,000
Excess of fair value over carrying
value of $40,000
Excess of carrying value over fair
value of $40,000
None of the options is correct](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcc3ab573-59bf-4679-891e-bee56476cf1b%2Ff1f19ef1-a60a-41cb-9dba-ed4c80c778af%2Fzi6oswh_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
$1,190,000
$1,210,000
Present value
of Future Cash Flows
$1,390,000
$1,400,000
* Identifiable net assets do not include goodwill.
Year
2011
2012
Choose the correct answer:
In year 2011 S Company had: *
Excess of fair value over carrying
value of $30,000
Excess of carrying value over fair
value of $30,000
Excess of fair value over carrying
value of $40,000
Excess of carrying value over fair
value of $40,000
None of the options is correct
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