Dow Corporation has assembled the following information for one of its divisions on December 31, 2020....

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Dow Corporation has assembled the following information for one of its divisions on December 31, 2020. Fair Value Book Value

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Answer 1

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a	Total identifiable assets	$2,400,000
	Goodwill	$200,000
	Less: liabilities	$1,000,000
	Net identifiable assets book value	$1,600,000
	Fair value of the division	$1,550,000

	Impairment as per ASC 350
	Step 1: Calculate the fair value of the reporting unit and compare it with the carrying amount which includes goodwill.

	Step 2: In the event when the fair value is lower than the carrying amount of the reporting unit, the fair
	value is allocated to all the assets by performing a purchase price allocation and the implied value of the goodwill is recognized
	in the same way as it is recognized in a business combination. If the implied value of goodwill is lower than the carrying value
	, goodwill is said to be impaired, and the loss is to be recorded in the profit and loss account


	Since, fair value of the reporting unit(1,550,000) is lower than carrying amount(1,600,000) there is impairment of $ 50,000


b	Net identifiable assets book value	$1,600,000
	Fair value of the division	$1,650,000

	Since, Fair value of the reporting unit(1,650,000) is more than carrying value(1,600,000) there is no impairment.

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Dow Corporation has assembled the following information for one of its divisions on December 31, 2020....

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