Reference no: EM132949776
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 $242,000 $239,000 $156,000
Trademark 216,000
Customer list 133,500
Unpatented technology 249,000
Licenses 102,500
Copyrights 50,750
Goodwill 181,500 199,400 101,500
Liabilities (52,500)
The total fair values for each reporting unit (including goodwill) are $697,400 for RU-1, $753,650 for RU-2, and $689,900 for RU-3. To date, Purchase has reported no goodwill impairments.
Problem 1: How much goodwill impairment should Purchase report this year for each of its reporting units?
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