Question
Hugo Corporation has acquired a number of other companies over the years. As a result, one of its reporting units (its plastics division) has reported
Hugo Corporation has acquired a number of other companies over the years. As a result, one of its reporting units (its plastics division) has reported goodwill of $600,000. Hugo is currently making its annual test to determine if goodwill has possibly been impaired. The plastics division has a book value of $4 million but a fair value of only $4.1 million. At that date, that division has the following assets and no liabilities: land (book value of $1 million and fair value of $1.3 million), buildings (net book value of $2 million and fair value of $2.2 million), equipment (net book value of $400,000 and fair value of $500,000), and goodwill (book value of $600,000 but fair value is not known). What loss should be recognized in connection with the impaired value of the goodwill?
A) Zero
B) $100,000
C) $500,000
D) $600,000
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