report

Goodwill Impairment Case

Fall 2020

Case Requirements

Assume that you are Tracy Roberts and you are preparing two reports to Morgan Mickelson or

Household Goods, Inc. You should answer the following questions. In one report, you assume

that Morgan Mickelson is a CPA and will understand citations to the Acc

ounting Standards

Codification (ASC).

In this first report, you should use appropriate citations to ASC.

The second

report covers similar information but the assumption is that Morgan Mickelson is

not

a CPA and

will not understand

citations to ASC. You mu

st conve

y the same information but in language

that any businessperson would understand.

1.

What is the procedure for testing goodwill for impairment according to ASC standards?

2.

Using

ASC

guidelines determine the goodwill valuation for ZD Corporation. Prov

ide

numbers to suppor

t your revaluation if necessary and explain your process.

3.

Using

ASC

guidelines determine the goodwill valuation for Hope Industries. Provide

numbers to support

your revaluation if necessary and explain your process

4.

How do the above a

nswers effect Household Goods segment information and overall

financial statements?

5.

What disclosures need to be provided in Household Goods financial reports concerning

goodwill

according to ASC

?

Assume that Househol

d Goods will be an early adopter of

the ASU 2017

-

04

, scheduled to be

adopted by publicly traded firms for fiscal years starting after Dec. 15, 2019.

Also, assume that

ZD and Hope are considered separate reporting units and Household Goods has not elected

the Accounting alternative.

Hint:

The carrying value of other asset and liability accounts must be determined before

goodwill impairment is considered. You should decide what the carrying value of

inventory, Property, plant and equipment, and bonds should be. After that, then you

consid

er the valuation of goodwill.

The answers should be conveyed in a report, not just answering the questions, 1, 2, 3 etc.

You should be thorough in your answers, but as co

ncise as possible. Each report

should be

around 2

-

3 pages. In the first report, you should use appropriate citations to ASC, but

not to

any other documents as other documents are not authoritative accounting guidance.

Goodwill Impairment Case

Fall 2020

Case Requirements

Assume that you are Tracy Roberts and you are preparing two reports to Morgan Mickelson or

Household Goods, Inc. You should answer the following questions. In one report, you assume

that Morgan Mickelson is a CPA and will understand citations to the Accounting Standards

Codification (ASC). In this first report, you should use appropriate citations to ASC. The second

report covers similar information but the assumption is that Morgan Mickelson is not a CPA and

will not understand citations to ASC. You must convey the same information but in language

that any businessperson would understand.

1. What is the procedure for testing goodwill for impairment according to ASC standards?

2. Using ASC guidelines determine the goodwill valuation for ZD Corporation. Provide

numbers to support your revaluation if necessary and explain your process.

3. Using ASC guidelines determine the goodwill valuation for Hope Industries. Provide

numbers to support your revaluation if necessary and explain your process

4. How do the above answers effect Household Goods segment information and overall

financial statements?

5. What disclosures need to be provided in Household Goods financial reports concerning

goodwill according to ASC?

Assume that Household Goods will be an early adopter of the ASU 2017-04, scheduled to be

adopted by publicly traded firms for fiscal years starting after Dec. 15, 2019. Also, assume that

ZD and Hope are considered separate reporting units and Household Goods has not elected

the Accounting alternative.

Hint: The carrying value of other asset and liability accounts must be determined before

goodwill impairment is considered. You should decide what the carrying value of

inventory, Property, plant and equipment, and bonds should be. After that, then you

consider the valuation of goodwill.

The answers should be conveyed in a report, not just answering the questions, 1, 2, 3 etc.

You should be thorough in your answers, but as concise as possible. Each report should be

around 2-3 pages. In the first report, you should use appropriate citations to ASC, but not to

any other documents as other documents are not authoritative accounting guidance.