Destin Company recently acquired several businesses and recognized goodwill in each acquisition. Destin has allocated the...

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	$	229,000		$	239,900
Trademark		269,000			249,000
Customer list		98,250			116,550
Goodwill		163,400			?
Liabilities		(39,250	)		(39,250	)
Salty Dog
Tangible assets	$	252,000		$	252,000
Unpatented technology		173,000			124,250
Licenses		134,000			153,400
Goodwill		160,500			?
Baytowne
Tangible assets	$	190,500		$	201,500
Unpatented technology		0			125,250
Copyrights		69,750			108,050
Goodwill		120,000			?

The fair values for each reporting unit (including goodwill) are $708,700 for Sand Dollar, $699,650 for Salty Dog, and $716,800 for Baytowne. To date, Destin has reported no goodwill impairments.

Determine which of Destin’s reporting units require both steps to test for goodwill impairment.
How much goodwill impairment should Destin report this year?

Solutions

Expert Solution

Let me know in case you face any issue:

For original size of image, Always press right click of mouse on image and select option "Open image in new tab". Image will be opened in new tab with original size. You can even download it by selecting option "save image as".

ekkarill92 answered 4 months ago

Next > < Previous

Related Solutions

Destin Company recently acquired several businesses and recognized goodwill in each acquisition. Destin has allocated the...

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 $ 267,000 $ 285,900 Trademark 251,000 226,100...

Jericho Company recently acquired three businesses, recognizing goodwill in each acquisition. The acquired goodwill was allocated...

Jericho Company recently acquired three businesses, recognizing goodwill in each acquisition. The acquired goodwill was allocated to the three reporting units: Apple, Banana, and Carrot. Jericho provides the following information in performing the 2012 annual review for impairment. Carrying Value Fair Value Valuation of Reporting Unit (Including Goodwill) Apple Tangible Assets $300,000 $320,000 $525,000 Trademarks 20,000 10,000 Licenses 85,000 90,000 Liabilities 20,000 20,000 Goodwill 130,000 ? Banana Tangible Assets $250,000 $400,000 $450,000 Trademarks 25,000 50,000 Licenses 18,000 18,000 Goodwill 140,000...

Tax Case 4 Goodwill Acquired in an Acquisition – Is it Deductible? As the CFO of...

Tax Case 4 Goodwill Acquired in an Acquisition – Is it Deductible? As the CFO of General Dynamo, you are very excited as you have just completed the negotiations related to the purchase of Apex Systems, a complimentary business to General Dynamo. The sole shareholder of Apex has agreed to either of the following purchase offers: A: General Dynamo will pay $10,000,000 for 100% of the outstanding stock of Apex OR B: General Dynamo will pay $11,000,000 for...

Albuquerque, Inc., acquired 24,000 shares of Marmon Company several years ago for $810,000. At the acquisition...

Albuquerque, Inc., acquired 24,000 shares of Marmon Company several years ago for $810,000. At the acquisition date, Marmon reported a book value of $880,000, and Albuquerque assessed the fair value of the noncontrolling interest at $270,000. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses. At the present time,...

Albuquerque, Inc., acquired 24,000 shares of Marmon Company several years ago for $780,000. At the acquisition...

Albuquerque, Inc., acquired 24,000 shares of Marmon Company several years ago for $780,000. At the acquisition date, Marmon reported a book value of $800,000, and Albuquerque assessed the fair value of the noncontrolling interest at $32,500. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses. At the present time,...

Consolidation several years subsequent to date of acquisition—Equity method Assume that a parent company acquired a...

Consolidation several years subsequent to date of acquisition—Equity method Assume that a parent company acquired a subsidiary on January 1, 2014. The purchase price was $785,000 in excess of the subsidiary’s book value of Stockholders’ Equity on the acquisition date, and that excess was assigned to the following [A] assets: [A] Asset Original Amount Original Useful Life Property, plant and equipment (PPE), net $140,000 16 years Patent 245,000 7 years License 105,000 10 years Goodwill 295,000 Indefinite $785,000 The [A]...

Albuquerque, Inc., acquired 18,000 shares of Marmon Company several years ago for $750,000. At the acquisition...

Albuquerque, Inc., acquired 18,000 shares of Marmon Company several years ago for $750,000. At the acquisition date, Marmon reported a book value of $820,000, and Albuquerque assessed the fair value of the noncontrolling interest at $250,000. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses. At the present time,...

Consolidation several years subsequent to date of acquisition—Equity method Assume that a parent company acquired a...

Consolidation several years subsequent to date of acquisition—Equity method Assume that a parent company acquired a subsidiary on January 1, 2014. The purchase price was $765,000 in excess of the subsidiary’s book value of Stockholders’ Equity on the acquisition date, and that excess was assigned to the following [A] assets: [A] Asset Original Amount Original Useful Life Property, plant and equipment (PPE), net $140,000 16 years Patent 245,000 7 years License 105,000 10 years Goodwill 275,000 Indefinite $765,000 The [A]...

Albuquerque, Inc., acquired 24,000 shares of Marmon Company several years ago for $720,000. At the acquisition...

Albuquerque, Inc., acquired 24,000 shares of Marmon Company several years ago for $720,000. At the acquisition date, Marmon reported a book value of $870,000, and Albuquerque assessed the fair value of the noncontrolling interest at $180,000. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses. At the present time,...

Albuquerque, Inc., acquired 24,000 shares of Marmon Company several years ago for $720,000. At the acquisition...

Albuquerque, Inc., acquired 24,000 shares of Marmon Company several years ago for $720,000. At the acquisition date, Marmon reported a book value of $500,000, and Albuquerque assessed the fair value of the noncontrolling interest at $30,000. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses. At the present time,...

Subjects