Question: Determination of Implied Fair Value using the FASB ASU 2017-4 standard

Question

Question: Determination of Implied Fair Value using the FASB ASU 2017-4 standards. I achieved the below calculations using the current standards but am not sure how to go about it using the update. Please tell me how to calculate the below using the NEW STANDARDS and include the Journal Entry

Fair Value of assets including Goodwill $445 Million

(Fair Value of Assets excluding Goodwill) ($425 Million)

=Implied Fair Value of Goodwill $20 Million

Measurement of Impairment Loss:

Book value of Goodwill $125 Million

(Implied Fair Value of Goodwill) ($20 Million)

=Impairment Loss $105 Million

Journal Entry for Impairment Loss:

Date Dec 31

Impairment loss on Goodwill Debit $105,000,000

Goodwill Credit $105,000,000

1.Based on the information above can early adoption of the FASB ASU 2017-4 standards update be used if so determine the amount of goodwill impairment loss using the data above and if applicable prepare the journal entry and indicate how the impairment should be reported on the income statement, balance sheet and cash statement

2.According to FASB ASU 2017-4, what would be the financial note disclosure?

Explanation / Answer

Yes Early Adoption Of FASB ASU 2017 -04 is Applicable because the new standards states that to avoid the second step of impairment of the goodwill which will be Effective from 2020 most probably
As far as impairment Loss Journal entry is
Goodwill A/c 20$ million Dr
Imapairment loss 105 $ million Dr
To Goodwill 125$ Million
The value of goodwill to be taken in balance sheet is 20$ [125-20] million
And impairment loss as deduction of goodwill
In cash flow value to be taken as 20 million
2.Financial note disclosure be like Total loss from impairment of goodwill is 105$ million

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