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
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