Problem 1: Reporting Unit C is assigned $200,000 of goodwill arising from a recent business combination. The current carrying value of its net assets is $400,000 and the current fair value of its net assets, excluding goodwill, is $350,000. The fair value of the reporting unit is estimated to be $380,000. The amount of the impairment loss is:
a. $150,000
b. $170,000
c. $180,000
d. $200,000
e. None of the above
Questions 2 and 3 refer to the following:
Assume that P Company purchases 10 percent of S Company's common stock for $50,000 at the beginning of the year. During the year, S has net income of $25,000 and pays dividends of $10,000.
Problem 2: The entry recorded by P for the purchase of S' common stock includes which of the following:
a. A debit to Cash for $50,000
b. Credit to Investment in S Company Common Stock for $50,000
c. Credit to Cash for $50,000
d. Debit to Cash for $10,000
e. None of the above
Problem 3: The entry recorded by P for the receipt of dividend income from S Company includes which of the following:
a. A credit to Cash for $1,000
b. A debit to Cash for $10,000
c. A debit to Dividend Income for $1,000
d. debit to Cash for $1,000
f. None of the above