Chapter_3_4 Class OUTLINE

Chapter_3_4 Class OUTLINE - Chapter 3 Goodwill...

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Chapter 3 Goodwill Impairment- SFAS No. 142 calls for an annual test of impairment for Goodwill Step 1- Compare fair value of REPORTING UNIT to carrying value of the REPORTING UNIT. If the FV<CV go to step 2 Step 2-Compare fair value of GOODWILL to carrying value of GOODWILL. If the FV of Goodwill < CV of Goodwill you have an impairment that is written off as part of net income The parent can account for its investment in one of three ways: Method Investment Account Income Account Equity Continually adjusted to reflect ownership of acquired company. Income accrued as earned; amortization and other adjustments are recognized. Initial Value Remains at initially recorded amount Cash received recorded as dividend Income. Partial Equity Adjusted only for accrued income and dividends received from acquired company. Income accrued as earned; no other adjustments recognized. Equity method Entry S - Eliminate the sub’s equity balances as of the beginning of the period. Plug the difference to Investment in Sub.
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This note was uploaded on 07/27/2011 for the course ACCT 102 taught by Professor Huxhold during the Spring '11 term at UCSD.

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Chapter_3_4 Class OUTLINE - Chapter 3 Goodwill...

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