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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 $ 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.

  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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