(Answered) Question - estimating goodwill impairmenton january 1 of

Accounting

Question - Estimating Goodwill Impairment

On January 1 of the current year, Engel Company purchases 100% of Ball Company for $8.4 million. At the time of acquisition, the fair value of Ball's tangible net assets (excluding goodwill) is $8.1 million. Engle ascribes the excess of $300,000 to goodwill. Assume that the fair value of Ball declines to $6.25 million and that the fair value of Ball's tangible net assets is estimated at $6.15 million as of December 31.

a. Determine if the goodwill has become impaired and, if so, the amount of the impairment.

b. What impact does the impairment of goodwill have on Engel's financial statements?

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