(Solution) American Accounting Association DOI:2308/iace-50949 ISSUES IN ACCOUNTING EDUCATION Vol. 30, No. 1 2015 pp. 35-46 Using the Codification to Research a...

untitled - iace-509491. Identify and cite the relevant topics/subtopics from the FASB Accounting Standards Codification for this case untitled - iace-509492.Identify the specific accounting issue that you believe needs to be initially addressed for JE’s consideration of goodwill with regards to both Dynamic and ZD. 3.What does the qualitative evidence from the case indicate about whether JE should perform the two-step impairment test? In your response, identify specific factors discussed in the Codification and relate them to the information provided to you in the case. 4.Beyond the assessment of qualitative factors, what other evidence should be considered for the purposes of the analysis? What does this information suggest? With respect to Dynamic, what do you think is the most appropriate fair value amount to use in assessing the fair value of this reporting unit? Explain. Why is this important? 5.Based upon the information provided above, should Dynamic and ZD be combined or separated for the purposes of the goodwill analysis? Explain. Why is this important? 6.Based upon your initial analysis, do you think the $200 million goodwill balance (i.e., the $150 million for Dynamic and the $50 million for ZD) is the appropriate valuation for goodwill on the December 31, 2014 balance sheet of JE? 7.Prepare a memo detailing the issues involved, the judgments you made in connection with the authoritative literature, and your recommendation for the direction of the goodwill valuation as it relates to Dynamic and ZD (i.e., does the evidence suggest further action is required in determining the appropriate valuation of goodwill? If so, what steps need to be taken?).ISSUES IN ACCOUNTING EDUCATION

 

American Accounting Association

 

Vol. 30, No. 1

 

DOI: 10.2308/iace-50949

 

2015

 

pp. 35–46

 

Using the

 

Codifcation

 

to Research a Complex

 

Accounting Issue: The Case of Goodwill

 

Impairment at Jackson Enterprises

 

Casey J. McNellis, Ronald F. Premuroso, and Robert E. Houmes

 

ABSTRACT:

 

This case is designed to help students develop research skills using the

 

Financial Accounting Standards Board’s (FASB)

 

Accounting Standards Codification

 

(

 

Codification

 

or ASC). The case also helps develop students’ abilities to analyze and

 

recommend alternatives for a complex accounting issue, goodwill impairment, which is

 

very relevant in today’s business world. This case can be used in an undergraduate or

 

graduate accounting class, either in groups of students or as an individual student

 

project.

 

Keywords:

 

FASB

 

CodiFcation;

 

goodwill impairment.

 

CASE

 

Goodwill Impairment—Background Summary

 

T

 

he requirements for assessing the valuation of goodwill subsequent to acquisition have

 

signiFcantly changed over the past 15 years, most recently with the option to perform

 

qualitative assessments prior to the commencement of the two-step impairment test and the

 

amortization alternative now available for private companies. ±urthermore, the valuation of

 

goodwill requires signiFcant judgment, and thus the authoritative literature is accompanied by

 

signiFcant implementation guidance. The standards surrounding goodwill and the following case

 

provide students the opportunity to (1) obtain a further understanding of the related concepts

 

learned from textbooks, (2) sharpen their professional research skills, and (3) apply judgment in a

 

relevant scenario.

 

Casey J. McNellis is an Assistant Professor and Ronald F. Premuroso is an Associate Professor, both at the

 

University of Montana, and Robert E. Houmes is an Associate Professor at Jacksonville University

 

.

 

We thank the editor, associate editor, and two anonymous reviewers for their comments and suggestions on previous

 

versions of this manuscript. We also thank Shandell VanDonsel, a Master’s of Accountancy candidate at the University

 

of Montana, for her help and assistance in the preparation of this manuscript. The experiment using human subjects

 

described in this manuscript was approved by the Institutional Review Board for the Use of Human Subjects in Research

 

at the respective University.

 

Published Online: October 2014

 

35

 

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