Alomar Co., a consolidated enterprise, conducted an impairment review for each of its reporting units. In its qualitative assessment,one particular reporting unit, Sellers, emerged as a candidate for possible goodwill impairment. Sellers had recognized net assets wicarrying amounts totaling $1,456, including goodwill of $920. Seller's reporting unit fair value is assessed at $1,289 and includes twointernally developed unrecognized intangible assets (a patent and a customer list with fair values of $301 and $141, respectively). Thefollowing table summarizes current financial information for the Sellers reporting unit:CarryingFairAmountsValues$94$158Tangible assets, netRecognized intangible assets, netGoodwillUnrecognized intangible assets442517920442a. Determine the amount of any goodwill impairment for Alomar's Sellers reporting unit.b. After recognition of any goodwill impairment loss, what are the reported carrying amounts for the following assets of Alomar'sreporting unit Sellers?Amountsa.Goodwill impairment loss$748b.Tangible assets, net$94Goodwill$172Patent$Customer list$

Answered: Alomar Co., a consolidated enterprise,…

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 65RSCQ

See similar textbooks

Related questions

Question

Alomar Co., a consolidated enterprise, conducted an impairment review for each of its reporting units. In its qualitative assessment,
one particular reporting unit, Sellers, emerged as a candidate for possible goodwill impairment. Sellers had recognized net assets wi
carrying amounts totaling $1,456, including goodwill of $920. Seller's reporting unit fair value is assessed at $1,289 and includes two
internally developed unrecognized intangible assets (a patent and a customer list with fair values of $301 and $141, respectively). The
following table summarizes current financial information for the Sellers reporting unit:
Carrying
Fair
Amounts
Values
$94
$158
Tangible assets, net
Recognized intangible assets, net
Goodwill
Unrecognized intangible assets
442
517
920
442
a. Determine the amount of any goodwill impairment for Alomar's Sellers reporting unit.
b. After recognition of any goodwill impairment loss, what are the reported carrying amounts for the following assets of Alomar's
reporting unit Sellers?
Amounts
a.
Goodwill impairment loss
$
748
b.
Tangible assets, net
$
94
Goodwill
$
172
Patent
$
Customer list
$

Expert Solution

Step 1

An impairment loss is recognized when the carrying value or the book value of the asset is more than the recoverable amount of an asset. In other words, when the recoverable amount (fair value) of an asset reduces below the carrying value of an asset, the difference in the amount is determined as an impairment loss.

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions