Goodwill Impairment

Cardinal Health included the following disclosure in a recent $10-K$ filing.

approach. The goodwill balance of the Medical Unit, after recognizing the impairment, was $$1\mathrm{.}9$ billion.

a$.$ Why did the company record an impairment loss?

The company recorded an impairment loss because the fair value of Medical Unit wa:

than the unit's net book value at the end of the year. GAAP requires that companies determine the fair value of each long$-$lived asset at the end of the fiscal year and

compare that fair value to the assets' carrying value. If the fair value is

than the carrying value, the asset is "impaired" in value and the company must record a charge to the income statement.

b$.$ Explain how the company determined the amount of the impairment loss. How did the company determine the Medical Unit's fair value?

Goodwill impairement $=$

of the unit reporting the goodwill, after adjusting for any impairment of identifiable assets, less the

of the unit.

The company determined the fair value using the

c$.$ What was the carrying value of the goodwill before and after the impairment charge?Goodwill Impairment

Cardinal Health included the following disclosure in a recent $10-K$ filing.

approach. The goodwill balance of the Medical Unit, after recognizing the impairment, was $$1\mathrm{.}9$ billion.

a$.$ Why did the company record an impairment loss?

The company recorded an impairment loss because the fair value of Medical Unit wa:

than the unit's net book value at the end of the year. GAAP requires that companies determine the fair value of each long$-$lived asset at the end of the fiscal year and

compare that fair value to the assets' carrying value. If the fair value is

than the carrying value, the asset is "impaired" in value and the company must record a charge to the income statement.

b$.$ Explain how the company determined the amount of the impairment loss. How did the company determine the Medical Unit's fair value?

Goodwill impairement $=$

of the unit reporting the goodwill, after adjusting for any impairment of identifiable assets, less the

of the unit.

The company determined the fair value using the

c$.$ What was the carrying value of the goodwill before and after the impairment charge?