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 | $279,000 | $250,000 | $187,500 | |
Trademark | 214,000 | |||
Customer list | 95,250 | |||
Unpatented technology | 212,000 | |||
Licenses | 130,500 | |||
Copyrights | 53,250 | |||
Goodwill | 200,900 | 159,950 | 92,000 | |
Liabilities | (51,000) | |||
The total fair values for each reporting unit (including goodwill) are $709,450 for RU-1, $714,050 for RU-2, and $730,500 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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