On January 1,20X8,Line Corporation acquired all of the common stock of Staff Company for $300,000.On that date,Staff's identifiable net assets had a fair value of $250,000.The assets acquired in the purchase of Staff are considered to be a separate reporting unit of Line Corporation.The carrying value of Staff's investment at December 31,20X8,is $310,000.The fair value of the net assets (excluding goodwill)at that date is $220,000 and the fair value of the reporting unit is determined to be 260,000.
Required:
1)Explain how goodwill is tested for impairment for a reporting unit.
2)Determine the amount,if any,of impairment loss to be recognized at December 31,20X8.

Question

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The Answer of On January 1,20X8,Line Corporation acquired all of the common stock of Staff Company for $300,000.On that date,Staff's identifiable net assets had a fair value of $250,000.The assets acquired in the purchase of Staff are considered to be a separate reporting unit of Line Corporation.The carrying value of Staff's investment at December 31,20X8,is $310,000.The fair value of the net assets (excluding goodwill)at that date is $220,000 and the fair value of the reporting unit is determined to be 260,000.
Required:
1)Explain how goodwill is tested for impairment for a reporting unit.
2)Determine the amount,if any,of impairment loss to be recognized at December 31,20X8.

On January 1,20X8,Line Corporation Acquired All of the Common Stock