Roadworthy Company acquired Highway Company on January 1,2014.As part of the acquisition,$1,000,000 in goodwill was recognized and assigned to Roadworthy's Transportation reporting unit.For 2014,earnings from the Transportation reporting unit were $450,000.Separately traded companies with operations similar to the Transportation reporting unit had market values approximately equal to five times earnings.As of December 31,2014,book values and fair values of the Transportation reporting unit were:
Prepare the impairment test of goodwill as well as any entry needed to record an impairment loss.
Definitions:
Output
The total amount of goods and services produced by an economy or a production process, serving as a key indicator of economic health.
Illegal Control
Unauthorized or unlawful dominance or influence over an entity, market, or activity.
Prices
The amount of money required to purchase a good, service, or asset.
Oligopolies
Market structures characterized by a small number of firms dominating the market, often leading to limited competition.
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