Destin Company recently acquired several businesses and recognized goodwill in each acquisition. Destin has allocated the resulting goodwill to its three reporting units: Sand Dollar, Salty Dog, and Baytowne. Destin opts to skip the qualitative assessment and therefore performs a quantitative goodwill impairment review annually. In its current year assessment of goodwill, Destin provides the following individual asset and liability values for each reporting unit: Carrying Amounts Fair Values Sand Dollar Tangible assets $ 242,000 $ 260,000 Trademark 216,000 191,600 Customer list 133,500 143,800 Goodwill 181,500 ? Liabilities (52,500 ) (52,500 ) Salty Dog Tangible assets $ 239,000 $ 239,000 Unpatented technology 249,000 195,750 Licenses 102,500 112,900 Goodwill 199,400 ? Baytowne Tangible assets $ 156,000 $ 174,300 Unpatented technology 0 165,750 Copyrights 50,750 83,850 Goodwill 101,500 ? The fair values for each reporting unit (including goodwill) are $697,400 for Sand Dollar, $753,650 for Salty Dog, and $689,900 for Baytowne. To date, Destin has reported no goodwill impairments. Determine which of Destin’s reporting units require both steps to test for goodwill impairment. How much goodwill impairment should Destin report this year?
Destin Company recently acquired several businesses and recognized goodwill in each acquisition. Destin has allocated the resulting goodwill to its three reporting units: Sand Dollar, Salty Dog, and Baytowne. Destin opts to skip the qualitative assessment and therefore performs a quantitative goodwill impairment review annually. In its current year assessment of goodwill, Destin provides the following individual asset and liability values for each reporting unit: Carrying Amounts Fair Values Sand Dollar Tangible assets $ 242,000 $ 260,000 Trademark 216,000 191,600 Customer list 133,500 143,800 Goodwill 181,500 ? Liabilities (52,500 ) (52,500 ) Salty Dog Tangible assets $ 239,000 $ 239,000 Unpatented technology 249,000 195,750 Licenses 102,500 112,900 Goodwill 199,400 ? Baytowne Tangible assets $ 156,000 $ 174,300 Unpatented technology 0 165,750 Copyrights 50,750 83,850 Goodwill 101,500 ? The fair values for each reporting unit (including goodwill) are $697,400 for Sand Dollar, $753,650 for Salty Dog, and $689,900 for Baytowne. To date, Destin has reported no goodwill impairments. Determine which of Destin’s reporting units require both steps to test for goodwill impairment. How much goodwill impairment should Destin report this year?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 10RE
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Destin Company recently acquired several businesses and recognized
In its current year assessment of goodwill, Destin provides the following individual asset and liability values for each reporting unit:
| Carrying Amounts | Fair Values | |||||
| Sand Dollar | ||||||
| Tangible assets | $ | 242,000 | $ | 260,000 | ||
| Trademark | 216,000 | 191,600 | ||||
| Customer list | 133,500 | 143,800 | ||||
| Goodwill | 181,500 | ? | ||||
| Liabilities | (52,500 | ) | (52,500 | ) | ||
| Salty Dog | ||||||
| Tangible assets | $ | 239,000 | $ | 239,000 | ||
| Unpatented technology | 249,000 | 195,750 | ||||
| Licenses | 102,500 | 112,900 | ||||
| Goodwill | 199,400 | ? | ||||
| Baytowne | ||||||
| Tangible assets | $ | 156,000 | $ | 174,300 | ||
| Unpatented technology | 0 | 165,750 | ||||
| Copyrights | 50,750 | 83,850 | ||||
| Goodwill | 101,500 | ? | ||||
The fair values for each reporting unit (including goodwill) are $697,400 for Sand Dollar, $753,650 for Salty Dog, and $689,900 for Baytowne. To date, Destin has reported no goodwill impairments.
-
Determine which of Destin’s reporting units require both steps to test for goodwill impairment.
-
How much goodwill impairment should Destin report this year?
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