Single Station Inc The Acquisition Appraisal of Single's Assets and Liabilities Indicates That

Single Station Inc. is acquired by Mega Communications on January 1, 2006 for $9,500. Prior to the acquisition, Single was projecting sales of $10,000 and total expenses of $8,000 in 2006 and forecasted that earnings will accumulate as cash. There are no operating synergies and no taxes.
$$\begin{array}{l}&\text { Jan. 1, } 2006\\\text { Current assets } & \$ 2,000 \\\text { Machinery and equipment } & 3,000 \\\text { Liabilities } & 2,500 \\\text { Equity } & 2,500\end{array}$$
The acquisition appraisal of Single's assets and liabilities indicates that fair market value (FMV) exceeds book value for the following assets only:

• machinery and equipment-$4,000 with a life 4 year life
• operating lease-$1,000 with 10 years remaining
• broadcast licenses-$500 with a 5 year life

a. Single is required to use push-down accounting. Prepare a pro forma balance sheet at January 1, 2006 for Single.
b. Prepare a pro forma income statement for the year ending December 31, 2006 using Single's projection.
c. Prepare a pro forma balance sheet at December 31, 2006.
d. Assume the pro forma results in b) and c) are achieved. A second appraisal of Single's assets at December 31, 2006 indicates that the FMV for Single as a whole is $7,500 and that the broadcast licenses are now worth $400. The FMV of Single's other assets and liabilities are the same as book. Determine whether goodwill has been impaired and thus, determine the amount of the loss, if any.