Problem - On January 1, 2010, Innovus, Inc., acquired 100 percent of the common stock of ChipTech Company for $670,000 in cash and other fair-value consideration. ChipTech's fair value was allocated among its net assets as follows:

Fair value of consideration transferred for ChipTech $670,000

Book value of ChipTech:

Common stock and APIC $130,000

Retained earnings 370,000 500,000

Excess fair value over book value to 170,000

Trademark (10-year remaining life) 40,000

Existing technology (5-year remaining life) 80,000 120,000

Goodwill $ 50,000

The December 31, 2011, trial balances for the parent and subsidiary follow:

Innovus ChipTech

Revenues $ (990,000) $(210,000)

Cost of goods sold 500,000 90,000

Depreciation expense 100,000 5,000

Amortization expense 55,000 18,000

Dividend income (40,000) -0-

Net income $ (375,000) $ (97,000)

Retained earnings 1/1/11 $(1,555,000) $(450,000)

Net income (375,000) (97,000)

Dividends paid 250,000 40,000

Retained earnings 12/31/11 $(1,680,000) $(507,000)

Current assets $ 960,000 $ 355,000

Investment in ChipTech 670,000

Equipment (net) 765,000 225,000

Trademark 235,000 100,000

Existing technology -0- 45,000

Goodwill 450,000 -0-

Total assets $ 3,080,000 $ 725,000

Liabilities $ (780,000) (88,000)

Common stock (500,000) (100,000)

Additional paid-in capital (120,000) (30,000)

Retained earnings 12/31/11 (1,680,000) (507,000)

Total liabilities and equity $(3,080,000) $(725,000)

Required

a. Using Excel, compute consolidated balances for Innovus and ChipTech. Either use a worksheet approach or compute the balances directly.

b. Prepare a second spreadsheet that shows a 2011 impairment loss for the entire amount of goodwill from the ChipTech acquisition.