Question

The fair value of net identifiable assets of a reporting unit of X Company is $300,000. On X Company's books, the carrying value of this reporting unit's net assets is $350,000, including $60,000 goodwill. If the fair value of the reporting unit is subsequently $335,000, what amount of goodwill impairment will be recognized for this unit? $0 $10,000 $25,000 $35,000

Answer 1

Answer:

$25,000

Explanation:

For computing, the impairment amount of goodwill first, we have to calculate the fair value of the goodwill which is shown below:

=  Fair value of the reporting unit -  fair value of net identifiable assets

= $335,000 - $300,000

= $35,000

Now deduct this amount from the carrying value

In mathematically,

Impairment amount = Carrying value - fair value of goodwill

                                = $60,000 - $35,000

                                = $25,000