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Case II Pritchett Company recently acquired three businesses, recognizing goodwill in each acquisition. Destin has allocated its acquired goodwill to its three reporting units: Apple,
Case II Pritchett Company recently acquired three businesses, recognizing goodwill in each acquisition. Destin has allocated its acquired goodwill to its three reporting units: Apple, Banana, and Carrot. Pritchett provides the following information in performing the 2013 annual review for impairment: Valuation of Reporting Unit (including Goodwill) $525,000 Apple Tangible assets Trademark Licenses Liabilities Goodwill Carrying Value $300,000 20,000 85,000 20,000 130,000 Fair Value $320,000 10,000 90,000 20,000 Banana $450,000 Tangible assets Trademark Licenses Goodwill $250,000 25,000 18,000 140,000 $400,000 50,000 18,000 Carrot $215.000 Tangible assets Unpatented technology Customer list Goodwill $120,000 0 35,000 75,000 $120,000 50,000 45,000 Requirements: 1). Which of Pritchett's reporting units require both steps to test for goodwill impairment? 2). How much goodwill impairment should Pritchett report for 2013
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