The fair value of net identifiable assets of a reporting unit of X Company is $300,000.On X Company's books,the carrying value of this reporting unit's net assets is $350,000,including $60,000 goodwill.If the fair value of the reporting unit is subsequently $335,000,what amount of goodwill impairment will be recognized for this unit?

Question

Quizplus · Accepted Answer

Goodwill impairment is recognized when the carrying amount of the reporting unit exceeds its fair value. In this case, the fair value of the reporting unit has declined from $300,000 to $335,000. The carrying amount of the reporting unit's net assets is $350,000, which is $15,000 more than the fair value. The goodwill impairment is therefore the excess of the carrying amount of goodwill ($60,000) over its implied fair value ($35,000), which is $25,000. Therefore, the correct answer is C.

The Fair Value of Net Identifiable Assets of a Reporting