Question

In 2018, Martin Corp. acquired Glynco and recorded goodwill of $56 million. Martin considers Glynco a separate reporting unit. By the end of 2021, the net assets (including goodwill) of Glynco are $331 million and its estimated fair value is $263 million. The amount of the impairment loss that Martin would record for goodwill at the end of 2021 is:

Answer 1

Answer: $56 million

Explanation:

Goodwill is an intangible asset that I generated from the good reputation of a company.

The impairment loss to Goodwill to be recorded is calculated thus,

Impairment loss = Carrying value - fair value

So plugging in the figures would give us,

= $331 - $263

= $68 million

The amount of impairment loss that Martin would therefore record for Goodwill at the end of 2021 is $56 million.

This number would be $68 million is Goodwill was up to or more than that nimber. But since it is not, we are limited to the actual amount of Goodwill.

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