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 | $180,000 | $200,000 | $140,000 | |
| Trademark | 170,000 | |||
| Customer list | 90,000 | |||
| Unpatented technology | 170,000 | |||
| Licenses | 90,000 | |||
| Copyrights | 50,000 | |||
| Goodwill | 120,000 | 150,000 | 90,000 | |
| Liabilities | (30,000) | |||
The total fair values for each reporting unit (including goodwill) are $510,000 for RU-1, $580,000 for RU-2, and $560,000 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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