On 1 January 20X0 Langer Ltd bought 80% of Slater Ltd by paying $2 000 000 cash and issuing 100 000 ordinary Langer Ltd shares with a fair value of $5.50 per share.The fair value of net assets of Slater Ltd at that date was $2 500 000.The control date fair value of the ownership interests of non-controlling shareholders was $650 000.On 1 January 20X3 Langer Ltd bought the remaining 20% of Slater Ltd on the share market for a total of $1 000 000 cash.The fair value of Slater Ltd's net assets at that date was $4 000 000.
-On 31 December 20X4 it was determined that goodwill (measured using the full method) was impaired by an amount of $512 500.What is the carrying amount of goodwill in the consolidated balances sheet at the 31 December 20X4 reporting date?

Question

Quizplus · Accepted Answer

The carrying amount of goodwill in the consolidated balance sheet at the 31 December 20X4 reporting date is $187,500. This is calculated as follows:Goodwill at acquisition (1/1/20X0) = $2,500,000 - $2,000,000 - (100,000 x $5.50) = $500,000Goodwill at acquisition (1/1/20X3) = $4,000,000 - $1,000,000 = $3,000,000Total goodwill = $500,000 + $3,000,000 = $3,500,000Impairment loss = $512,500Carrying amount of goodwill = $3,500,000 - $512,500 = $187,500

On 1 January 20X0 Langer Ltd Bought 80% of Slater