Regular Corp.has four divisions.One of them,Yulon Products,was acquired on January 1,2016,for $80,000,000,and recorded goodwill of $9,000,000 as a result of that purchase.At December 31,2017,Yulon Products had a fair value (including goodwill)of $66,000,000.The book value of the company's net assets (without goodwill)at December 31,2017 was $77,000,000.For 2017,Regular reported a loss on impairment of goodwill of $7,000,000.What was the fair value of the company's net assets (without goodwill)at December 31,2017?
A)$73,000,000
B)$68,000,000
C)$64,000,000
D)$59,000,000

Question

Quizplus · Accepted Answer

The fair value of Yulon Products at December 31, 2017, including goodwill, was $66,000,000, which is less than the book value of net assets ($77,000,000). As a result, goodwill impairment should be recognized. The loss on impairment of goodwill was $7,000,000, which means the remaining fair value of goodwill is $9,000,000 - $7,000,000 = $2,000,000. Therefore, the implied fair value of the net assets (excluding goodwill) is $66,000,000 - $2,000,000 = $64,000,000. This is the answer choice C.