Rome Company buys a division of Auxerre Company, Division A, for $2,300,000 in 2008. The...
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Accounting
Rome Company buys a division of Auxerre Company, Division A, for $2,300,000 in 2008. The fair value of Division As net assets at the time of the purchase is $2,100,000. In 2009, the book value of Division As total assets is $2,700,000 and total liabilities is $900,000. It is determined that Division As fair value in 2009 is $1,750,000.
a) The balance of the Division As Goodwill account for 2009 should be:
b) Assuming a tax rate of 30%, the effect of Goodwill impairment on Romes 2009 net income is:
The answer for part A is $150,000 & part B is a reduction of $35,000.
I need to know how to work out this problem to arrive at these answers. Please show all work.
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