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 $1,366, including goodwill of $915. Seller’s fair value is assessed at $1,181 and includes two internally developed unrecognized intangible assets (a patent and a customer list with fair values of $222 and $115, respectively). The following table summarizes current financial information for the Sellers reporting unit:

	Carrying Amounts			Fair Values
Tangible assets, net	$	114		$	160
Recognized intangible assets, net		337			387
Goodwill		915			?
Unrecognized intangible assets		0			337
Total	$	1,366		$	1,181

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?

Answer 1

As per AS 28 Impairment of Assets, assets should be impaired at the end of the accounting year if it's carrying amount exceed recovered amount. Further, any impairment loss recognized is first amortized against goodwill and then on the remaining assets.

Carrying amount of Assets: $1,366

less: Recovered amount should be higher of fair value or net assets: $1,181

Impairment loss $185

This amount of $185 is first utilized towards goodwill impairment and balance left should be allocated to other remaining assets.

Goodwill before impairment loss: $915

Less: Impairment loss $195

Goodwill after impairment loss $730

Therefore, goodwill after impariment loss should be $730 and the carrying amount of remaining assets is $451.