You are performing an accounting analysis on ABC Company and noted excessive goodwill balances relative to reported PPE. The following table was constructed from ABC’s 10-K information. Assume all new goodwill is recognized at the end of the year for the purpose of restatement. Further, assume a tax rate of 30%. The first year to be restated is 2012. ABC has a December 31 fiscal year end. Assume goodwill has a 4-year useful life and that you are adjusting the account. Assume all M&A activity takes place on the last day of the fiscal year. Financial Information on an “As-Reported” Basis

                                     2012            2013             2014            2015

Beginning Balance 20,000,000 23,000,000 26,000,000    31,000,000

   New Goodwill       3,000,000   5,000,000    8,000,000       2,000,000

Goodwill Impaired            0       2,000,000     3,000,000      10,000,000

Ending Goodwill     23,000,000   26,000,000   31,000,000    23,000,000

1. On a re-stated basis, how much goodwill should be reported on the 2012 Balance Sheet?

a. nothing

b. $20,000,000

c. $23,000,000

d. $18,000,000

e. $5,000,000

2. In order to complete the restatement process, how much additional goodwill impairment would you have to recognize in 2013?

a. $4,000,000

b. $3,000,000

c. $5,000,000

d. $5,750,000

e. $3,750,000