Acquirer Company bought Servile Company for $5,000,000 on January 2, 2004. The fair market value of the individual net assets was $3,500,000. In succeeding years, the fair market value of Servile's costs and goodwill were as follows:
|
Year
|
Fair Market
Value of
Servile
|
Cost of Servile's
Net Assets and
Goodwill
|
|
2005
|
$7,000,000
|
$7,100,000
|
|
2006
|
7,300,000
|
6,700,000
|
|
2007
|
8,000,000
|
9,300,000
|
Required:
a. What amount of goodwill should be recognized as a result of the acquisition of Servile in 2004?
b. Determine the amounts of the goodwill write-offs (if any) in 2005, 2006, and 2007.