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:
Goddwill Impairment loss ? for RU-1? RU-2? RU-3?
|
| Carrying Amounts | ||
|
| RU-1 | RU-2 | RU-3 |
| Tangible assets | $267,000 | $265,000 | $203,250 |
| Trademark | 251,000 |
|
|
| Customer list | 136,500 |
|
|
| Unpatented technology |
| 236,000 |
|
| Licenses |
| 134,500 |
|
| Copyrights |
|
| 60,750 |
| Goodwill | 183,050 | 193,700 | 98,000 |
| Liabilities | (39,750) |
|
|
The total fair values for each reporting unit (including goodwill) are $781,400 for RU-1, $789,900 for RU-2, and $712,750 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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Accounting For Non Accounting Students
Authors: John Dyson, Ellie Franklin
10th Edition
1292286938, 9781292286938
