Question
Destin Company recently acquired several businesses and recognized goodwill in each acquisition. Destin has allocated the resulting goodwill to its three reporting units: Sand Dollar,
Destin Company recently acquired several businesses and recognized goodwill in each acquisition. Destin has allocated the resulting goodwill to its three reporting units: Sand Dollar, Salty Dog, and Baytowne. Destin opts to skip the qualitative assessment and therefore performs a quantitative goodwill impairment review annually.
In its current year assessment of goodwill, Destin provides the following individual asset and liability values for each reporting unit:
Carrying Amounts | Fair Values | |||||
Sand Dollar | ||||||
Tangible assets | $ | 247,000 | $ | 261,900 | ||
Trademark | 187,000 | 164,400 | ||||
Customer list | 134,250 | 153,550 | ||||
Goodwill | 189,750 | ? | ||||
Liabilities | (53,750 | ) | (53,750 | ) | ||
Salty Dog | ||||||
Tangible assets | $ | 294,000 | $ | 294,000 | ||
Unpatented technology | 194,000 | 125,250 | ||||
Licenses | 131,500 | 142,500 | ||||
Goodwill | 196,700 | ? | ||||
Baytowne | ||||||
Tangible assets | $ | 182,000 | $ | 201,300 | ||
Unpatented technology | 0 | 156,750 | ||||
Copyrights | 74,000 | 108,000 | ||||
Goodwill | 94,000 | ? | ||||
The fair values for each reporting unit (including goodwill) are $694,850 for Sand Dollar, $766,750 for Salty Dog, and $754,050 for Baytowne. To date, Destin has reported no goodwill impairments.
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Determine which of Destins reporting units require both steps to test for goodwill impairment.
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How much goodwill impairment should Destin report this year?
Complete this question by entering your answers in the tabs below.
- Required A
- Required B
Determine which of Destins reporting units require both steps to test for goodwill impairment.
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How much goodwill impairment should Destin report this year? (If any of the reporting units do not require both steps to test for goodwill, select NA from the dropdown list.)
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