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 | $247,000 | $294,000 | $182,000 | |
| Trademark | 187,000 | |||
| Customer list | 134,250 | |||
| Unpatented technology | 194,000 | |||
| Licenses | 131,500 | |||
| Copyrights | 74,000 | |||
| Goodwill | 189,750 | 196,700 | 94,000 | |
| Liabilities | (53,750) | |||
The total fair values for each reporting unit (including goodwill) are $694,850 for RU-1, $766,750 for RU-2, and $754,050 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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