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  3. destin company recently acquired several businesses and recognized goodwill in...

Question: destin company recently acquired several businesses and recognized goodwill in...

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Destin Company recently acquired several businesses and recognized goodwill in each acquisition. Destin has allocated the resulting goodwill to its three reporting units: Sand Dollar, Salty Dog, and Baytowne. Destin opts to skip the qualitative assessment and therefore performs a quantitative goodwill impairment review annually.

In its current year assessment of goodwill, Destin provides the following individual asset and liability values for each reporting unit:

Carrying Amounts Fair Values
Sand Dollar
Tangible assets $ 222,000 $ 241,100
Trademark 243,000 218,200
Customer list 149,250 163,050
Goodwill 128,750 ?
Liabilities (48,250 ) (48,250 )
Salty Dog
Tangible assets $ 230,000 $ 230,000
Unpatented technology 261,000 206,750
Licenses 137,000 150,600
Goodwill 183,400 ?
Baytowne
Tangible assets $ 164,250 $ 179,450
Unpatented technology 0 172,500
Copyrights 54,500 88,100
Goodwill 97,000 ?

The fair values for each reporting unit (including goodwill) are $678,350 for Sand Dollar, $777,350 for Salty Dog, and $759,050 for Baytowne. To date, Destin has reported no goodwill impairments.

  1. Determine which of Destin’s reporting units require both steps to test for goodwill impairment.

  2. How much goodwill impairment should Destin report this year?

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