ACCOUNTING-Walker Company (a US company) paid US$3,700,000 to acquire all of the common stock

QUESTION

Question 5On May 1, 2011, Walker Company (a US company) paid US$3,700,000 to acquire all of the commonstock of Hayden Corporation (an Australian company), which now became a division of Walker.Hayden reported the following US$ balance sheet at the time of the acquisition:BookValue $Fair900,000Value $1,500,000Noncurrent Assets2,700,0002,300,000Current liabilities(600,000)(700,000)Long-term liabilities(500,000)(400,000)Current AssetsAt December 31, 2011, Hayden reports the following US$ balance sheet information:Book Value $Current Assets800,000FairValue $800,000(700,000)1,300,000(700,000)(500,000)Noncurrent Assets (excluding Goodwill)(400,000)1,500,000Current liabilitiesLong-term liabilitiesDuring the annual impairment test conducted on December 31, 2011, it was determined that the fairvalue of the Hayden division as a whole was $2,400,000.Required:(a) Compute the amount of goodwill recognized, if any, on May 1, 2011.(b) Determine the impairment loss, if any, to be recorded on December 31, 2011.(c) Determine the implied fair value of goodwill on December 31, 2011.(d) On the assumption that the fair value of Hayden on December 31, 2010 was $1,650,000 insteadof $2,400,000, determine the impairment loss, if any, to be recorded.3

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