During 2009, Lexie, Inc. acquired Lena, Inc. for $10,000,000. The fair market value of the net assets of Lena, Inc. was $8,500,000 on the date of purchase. During 2012, Lexie, Inc. determined the goodwill resulting from the Lena acquisition was impaired and had a value of $1,000,000.
a. Determine the amount of goodwill implied during 2009.
b. Illustrate the effects on the accounts and the financial statements of the amortization for 2012.
- Assets = Liabilities + Stockholders' Equity
- Cash Goodwill Capital Stock Retained Earnings
- Statement of Cash Flows Income Statement