In 2008, Antle Inc. had acquired Demski Co. and recorded goodwill of $245 million as a result. The net assets (including goodwill) from Antle's acquisition of Demski Co. had a 2009 year-end book value of $580 million. Antle assessed the fair value of Demski at this date to be $700 million, while the fair value of all of Demski's identifiable tangible and intangible assets (excluding goodwill) was $550 million. The amount of the impairment loss that Antle would record for goodwill at the end of 2009 is:
A)$150 million
B)$ 95 million
C)$ 0
D)None of these is correct An impairment loss must be recognized if book value of the reporting unit acquired exceeds it fair value.In this case, it does not, so no impairment loss is recognized.

Question

Quizplus · Accepted Answer

Goodwill impairment is recognized when the carrying amount of goodwill exceeds its implied fair value. In this case, the fair value of the reporting unit is greater than the carrying value, so no impairment loss is recognized. Therefore, the answer is C.