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Question(s) / Instruction(s):

6. Wilbur & Co acquired Smith & Co on January 1, 2011. As part of the acquisition, $1,000,000 in goodwill was recognized and assigned to Wilbur‚s Transportation Reporting Unit. For 2011, earnings from the Transportation reporting unit were $450,000. Separately Traded companies with operations similar to Transportation reporting unit had market values approximately equal to five times earnings. As of December 31, 2011, book values and fair values of the Transportation reporting Unit were: Book Value Fair Value Intangible Assets $4,000,000 $4,500,000 Goodwill $1,000,000 - Liabilities $2,500,000 $2,500,000 Prepare the impairment test of goodwill as well as any entry needed to record an impairment

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