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 | $237,000 | $227,000 | $202,500 | |
Trademark | 173,000 | |||
Customer list | 93,750 | |||
Unpatented technology | 239,000 | |||
Licenses | 122,500 | |||
Copyrights | 53,500 | |||
Goodwill | 167,500 | 228,800 | 108,000 | |
Liabilities | (41,750) | |||
The total fair values for each reporting unit (including goodwill) are $613,200 for RU-1, $783,850 for RU-2, and $729,500 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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