During 2015,Lexie,Inc

question 52

Essay

During 2015,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 2018,Lexie,Inc.determined the goodwill resulting from the Lena acquisition was impaired and had a value of $1,000,000.

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Definitions:

Bonds

A type of fixed-income investment where an investor loans money to an entity (corporate or governmental) which borrows the funds for a defined period at a variable or fixed interest rate.

Asset Allocation

The strategy of distributing investments among various classes of assets to manage risk and enhance returns.

Abnormal Return

Abnormal Return is the difference in the actual return of a security over a set period of time from its expected return based on the market or model prediction.

Bonds

Fixed income investment products that represent a loan made by an investor to a borrower, typically corporate or governmental, which pays periodic interest payments and the return of the principal at maturity.