Albers Company acquires an 80% interest in Barker
Company on January 1 2011 for $850000. The following determination and distribution of
excess schedule is prepared at the time of purchase:
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Fair Price Value
Value (80%) (20%)
Fair value of subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . $1062500 $850000 $212500
Less book value of interest acquired:
Total equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 600000 $600000 $600000
Interest acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80% 20%
Book value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %u2026.. $480000 $120000
Excess of fair value over book value . . . . . . . . . . . . . . . . .. $ 462500 $370000 $ 92500
Adjustment of identifiable accounts:
Adjustment Amortization Worksheet
per Year Life Key
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200000 $ 10000 20 debit D1
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262500 debit D2
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 462500
Albers uses the simple equity method for its investment in Barker. As of December 31
2015 Barker has earned $200000 since it was purchased by Albers. Barker pays no dividends
during 2011%u20132015.
On December 31 2015 the following values are available:
Fair value of Barker%u2019s identifiable net assets (100%) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 900000
Estimated fair value of Barker Company (net of liabilities) . . . . . . . . . . . . . . . . . . . . . 1000000
Determine if goodwill is impaired. If not explain your reasoning. If so calculate the loss on
impairment.
