The fair value of net identifiable assets of a reporting unit of Y Company is $270,000.The carrying value of the reporting unit's net assets on Y Company's books is $320,000,including $50,000 goodwill.If the reported goodwill impairment for the unit is $10,000,what would be the fair value of the reporting unit?

Question

Quizplus · Accepted Answer

Since the fair value of the net identifiable assets is $270,000 and the carrying value of the net assets is $320,000, including $50,000 goodwill, the implied fair value of goodwill is $320,000 - $270,000 = $50,000. If the reported goodwill impairment is $10,000, the remaining goodwill is $50,000 - $10,000 = $40,000. Therefore, the fair value of the reporting unit would be $270,000 + $40,000 = $310,000. Hence, the best choice is B.

The Fair Value of Net Identifiable Assets of a Reporting