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Step one: |
Reporting Unit A |
Reporting Unit B |
||
Fair value of reporting unit |
$1,000 |
$500 |
||
Carrying amount of reporting unit (including $200 goodwill each for A and B) |
600 |
600 |
||
Difference |
$400 |
$(100) |
||
Passed |
Failed |
Step two: |
Reporting Unit A |
Reporting Unit B |
Fair value of reporting unit |
n/a |
$500 |
Fair value of reporting unit’s identifiable assets and liabilities determined in accordance with ASC 805 |
(425) |
|
Implied fair value of goodwill |
75 |
|
Carrying amount of reporting unit’s goodwill |
200 |
|
Goodwill impairment loss |
$(125) 1 |
Book value |
Fair value |
|||
Working capital |
$80 |
$80 |
||
Real estate |
700 |
850 |
||
Notes receivable |
100 |
100 |
||
Patent (finite-lived intangible) |
50 |
40 |
||
Trade name (indefinite-lived intangible) |
40 |
95 |
||
Notes payable |
(200) |
(185) |
||
Net assets |
770 |
980 |
||
Goodwill |
280 |
|||
Total carrying amount of Reporting Unit X |
$1,050 |
|||
Fair value of Reporting Unit X |
1,000 |
|||
Implied fair value of goodwill |
20 |
|||
Carrying amount of goodwill |
280 |
|||
Goodwill impairment loss |
$(260) |
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