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question on may 28 2013 pesky corporation acquired all ofthe outstanding common stoc 4292826

 

Question

On May 28, 2013, Pesky Corporation acquired all ofthe outstanding common stock of Harman, Inc., for $560 million. Thefair value of Harman's identifiable tangible and intangible assetstotaled $610 million, and the fair value of liabilities assumed byPesky was $160 million.

 

     Pesky performed agoodwill impairment test at the end of its fiscal year endedDecember 31, 2013. Management has provided the followinginformation:

 

 

  Fair value of Harman,Inc.

$

540

million

  Fair value of Harman's net assets(excluding goodwill)

 

480

million

  Book value of Harman's net assets(including goodwill)

 

558

million

1.

Determine the amount of goodwill that resulted fromthe Harman acquisition. (Enteryour answer in millions.)

 

2.

Determine the amount of goodwill impairment loss thatPesky should recognize at the end of 2013, if any. (Enter your answers inmillions.)

 

3.

If an impairment loss is required, prepare thejournal entry to record the loss. (If no entry is required for an event, select “No journalentry required” in the first account field. Enter your answers inmillions (i.e., 5,500,000 should be entered as 5.5))

       

 

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