Option #1: Goodwill Impairment Test
Assume that the equity method Equity Investment account relating to a subsidiary has a reported balance of $6,250,000, including a carrying value of goodwill of $619,000. You currently value that subsidiary at $5,625,000, and estimate that the fair value of the subsidiary’s net assets, other than goodwill, is $5,375,000.
Attach a PowerPoint presentation indicating:
- The steps required in assessing for goodwill impairment.
- The determination if the above scenario indicates that goodwill is impaired (showing all work).
- The required journal entries if indeed there is goodwill impairment.
- Review the grading rubric following this assignment, to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.