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 had recognized net assets with carrying amounts totaling $1,192, including goodwill of $705. Seller’s reporting unit fair value is assessed at $1,184 and includes two internally developed unrecognized intangible assets (a patent and a customer list with fair values of $272 and $112, respectively). The following table summarizes current financial information for the Sellers reporting unit:

	Carrying Amounts		Fair Values
Tangible assets, net	$103		$154
Recognized intangible assets, net	384		453
Goodwill	705		?
Unrecognized intangible assets	0		384

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?

Amounts a. Goodwill impairment loss b. Tangible assets, net Goodwill Patent Customer list

Answer 1

SOLUTION A: GOODWILL IMPAIRMENT LOSS = $ 512

EXPLANATION :

Recognised net assets by seller	$1192
Fair Value of net assest by seller	$1184
Different Between Recognised and Fair Value of net assest	$8

$\because$ The Recognised net assets is Grater than Fair value ,there is a potential Goodwill impairment loss

Fair Value of net assest by seller	$1184
LESS:
Tangible assest(net)	(154)
Recognised intangible Assets (net)	(453)
UnRecognised intangible Assets	(384)
Implied Value of Goodwill	193
Carrying Value Of Goodwill	705
GOODWILL IMPAIRMENT LOSS(705 -193)	512

SOLUTION(B)

TANGIBLE ASSEST(NET) =$103

GOODWILL = $193

PATENT = 0

CUSTOMER LIST = 0

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LEARNING NOTE : WE IMPAIR A ASSEST WHEN THERE ARE CIRCUMSTANCES WHICH SHOWS THAT THE FV LESS CTS OF ASSEST IS LESS THAN THE CARRYING VALUE .WE TAKING THE VALUE OF AN ASSEST UPTO FV .

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Answer 2