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On 1/1/2014, P Company acquires 100% of the voting stock of S, Inc. for $18,000,000 in cash. Some of S assets had

fair values that differed from their book values, as follows:

                                                                                                           BOOK VALUE        FAIR VALUE

Property & Equipment, net (20 remaining life, SL)                  $11,000,000          $3,000,000

Identifiable intangible assets (5 years, SL)                                   $            000          $10,000,000

S total stockholders' equity at 1/1/2014 was $5,000,000. Now we are at 12/31/2017, four years later. S's retained earnings, January 1, 2017 reflect the accumulation of net income less dividends. S does not report any AOCI. Cumulative goodwill impairment to the beginning of 2017 is $1,000,000. Additional goodwill impairment of $500,000 was incurred in 2017. P uses the complete equity method to record its investment in S. The trial balance at 12/31/2017 for S appears below.

S, Inc.Debit (Credit) Current assets  $  3,500,000Property & equipment  28,000,000Current liabilities   (1,500,000)  Noncurrent liabilities   (9,000,000)Common stock and additional paid-in capital  (2,000,000)Retained earnings, 1/1/17  (16,500,000)Sales revenues   (14,500,000)COGS  8,500,000 Operating expenses  3,500,000   


Goodwill on the consolidated financial statements as of 12/31/17 is

a.Zero

b.$9,500,000

c.$1,500,000

d.$13,000,000

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