Case Study: The Case of Goodwill Impairment at Jackson Enterprises

Case Study: The Case of Goodwill Impairment at Jackson Enterprises

Case Study: The Case of Goodwill Impairment at Jackson Enterprises

WRITING ASSESSMENT

Case Study: The Case of Goodwill Impairment at Jackson Enterprises

By: Casey McNellis, Ronald Premuroso, & Robert Houmes

This writing assessment is designed to enhance your research skills using the FASB Codification and improve your graduate level writing skills. Login credentials to the FASB Codification are provided in the syllabus under Class Guidelines.

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Academic writing is different from general writing. You are strongly advised to start this project early in the semester and engage the help of UMUC Writing Tutors. Every graduate accounting course offers free UMUC writing tutors. Register for a writing tutor at the beginning of the semester and submit drafts of this assignment for guidance. Upon receiving guidance from a UMUC writing tutor, improve your next draft, and resubmit your paper for additional guidance. Writing is an iterative process whereby you plan, research, write, edit, research more if needed, rewrite, edit, and rewrite until you have created a clear, concise, and correct paper.

Instructions:

Read the case study and prepare answers to the questions at the end of the case.

APA style formatting is required..

Approximate length of paper using APA style is 10 pages.

Resources:

Writing a Research Paper: https://owl.english.purdue.edu/owl/resource/658/01/

APA: https://owl.english.purdue.edu/owl/section/2/10/

Developing your graduate level writing skills: https://owl.english.purdue.edu/owl/section/1/2/

Proposed Accounting Standards Update: Simplifying the Accounting for Goodwill Impairment, by FASB; May 12, 2016: http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176168146260&acceptedDisclaimer=true

What Constitutes Graduate Level Writing; source unknown. In LEO, Content, Week 9.

1. Identify and cite the relevant topics/subtopics from the FASB Accounting Standards Codification for this case.

1 Average cost is $1,495; times 1.5385 equals a selling price of $2,300. The $2,300 unit selling price less $1,495 unit cost equals a gross margin of $805, which is 35 percent of selling price.

Issues in Accounting Education

Volume 30, No. 1, 2015

Using the Codification to Research a Complex Accounting Issue

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2. 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?).