Alomar Co., a consolidated enterprise, conducted an impairment review for each o

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 has recognized net assets of $1,542, including goodwill of $935. Seller’s fair value is assessed at $1,392 and includes two internally developed unrecognized intangible assets (a patent and a customer list with fair values of $309 and $143, respectively). The following table summarizes current financial information for the Sellers reporting unit:

Determine the amount of any goodwill impairment for Alomar’s Sellers reporting unit. Goodwill impairment loss___________

B. After recognition of any goodwill impairment loss, what are the reported book values for the following assets of Alomar’s reporting unit Sellers?

Tangible assets

net Goodwill

Patent

Customer list

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 $1,542, including goodwill of $935. Seller’s fair value is assessed at $1,392 and includes two internally developed unrecognized intangible assets (a patent and a customer list with fair values of $309 and $143, respectively). The following table summarizes current financial information for the Sellers reporting unit:

Explanation / Answer

1.

Carrying amount of the unit = $1,542

Fair value of the unit = $1,392

Carrying amount of the unit is higher than the fair value of the unit. Hence, impairment loss exists.

Fair value of identifiable assets = $190 + $510 + $452 = $1,152

Implied value of goodwill = Fair value of unit – Fair value of the identifiable assets = $1,392 - $1,152 = $240

Carrying amount of goodwill = $935

Impairment loss = Carrying amount – Implied value = $935 - $240 = $695

2.

Tangible assets

$155

Net Goodwill

$240

Customer list

$0

Patent

$0

Tangible assets

$155

Net Goodwill

$240

Customer list

$0

Patent

$0

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