Double Corporation acquired all of the common stock of Simple Company for $450,000 on January 1, 20X4.

Question:

Double acquired all of the of Simple Company for $450,000 on January 1, 20X4. On that date, Simple’s identifiable net assets had a fair value of $390,000. The assets acquired in the purchase of Simple are considered to be a separate reporting unit of Double. The carrying value of Double’s investment at December 31, 20X4, is $500,000.

Required
Determine the amount of impairment, if any, that should be recognized at December 31, 20X4, if the fair value of the net assets (excluding ) at that date is $440,000 and the fair value of the reporting unit is determined to be
a. $530,000.
b. $485,000.
c. $450,000.

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