Question

Alomar Co., a consolidated enterprise, conducted an impairment review for each of its reporting units. In...

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 has recognized net assets of $780, including goodwill of $500. Seller’s fair value is assessed at $650 and includes two internally developed unrecognized intangible assets (a patent and a customer list with fair values of $150 and $50, respectively). The following table summarizes current financial information for the Sellers reporting unit:


Carrying
Amounts
Fair
Values
Tangible assets, net $ 80 $ 110
Recognized intangible assets, net 200 230
Goodwill 500 ?
Unrecognized intangible assets 0 200
Total $ 780 $ 650
  1. Determine the amount of any goodwill impairment for Alomar’s Sellers reporting unit.

  2. After recognition of any goodwill impairment loss, what are the reported carrying amounts for the following assets of Alomar’s reporting unit Sellers?

Homework Answers

Answer #1

a.

Fair value of reporting unit      650.00
Fair value of net assets excluding goodwill  
Tangible assets      110.00
Recognized intangibles      230.00
Unrecognized intangibles      200.00      540.00
Implied value of goodwill      110.00
Carrying value of goodwill      500.00
Goodwill impairment loss      390.00

b.

Tangible assets, net         80.00
Goodwill      110.00
Patent 0.00
Customer list 0.00  
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