Question
Purchase Company recently acquired several businesses and recognized goodwill in each acquisition. Purchase has allocated the resulting goodwill to its three reporting units: RU-1, RU-2,
Purchase Company recently acquired several businesses and recognized goodwill in each acquisition. Purchase has allocated the resulting goodwill to its three reporting units: RU-1, RU-2, and RU-3. Purchase opts to skip the qualitative assessment and therefore performs a quantitative goodwill impairment review annually.
In its current-year assessment of goodwill, Purchase provides the following individual asset and liability carrying amounts for each of its reporting units:
| Carrying Amounts | ||||
| RU-1 | RU-2 | RU-3 | ||
| Tangible assets | $218,000 | $220,000 | $180,750 | |
| Trademark | 210,000 | |||
| Customer list | 124,500 | |||
| Unpatented technology | 233,000 | |||
| Licenses | 103,500 | |||
| Copyrights | 55,500 | |||
| Goodwill | 188,300 | 245,550 | 135,500 | |
| Liabilities | (35,750) | |||
The total fair values for each reporting unit (including goodwill) are $675,150 for RU-1, $769,050 for RU-2, and $757,750 for RU-3. To date, Purchase has reported no goodwill impairments.
How much goodwill impairment should Purchase report this year for each of its reporting units?
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The Chronic Cost Saving Hundreds Of Thousands Of Dollars For Companies With 50 To 500 Employees
Authors: Clayton Wood
1st Edition
B0BBPYBBHN, 979-8218062026
