Answer:
Purchase Company
RU-1 RU-2 RU-3
Goodwill Impairment loss (gain) $8,300 $44,600 ($383,250)
Explanation:
a) Data and Calculations:
Carrying Amounts
RU-1 RU-2 RU-3
Tangible assets $215,500 $261,000 $158,250
Trademark 257,000
Customer list 154,500
Unpatented technology 232,500
Licenses 100,000
Copyrights 65,500
Goodwill 190,250 187,550 136,500
Liabilities (35,000)
Book values $782,250 $781,050 $360,250
Fair values $773,950 $736,450 $743,500
Goodwill Impairment
loss (gain) $8,300 $44,600 ($383,250)
b) Purchase Company will recognize Goodwill impairment expense for RU-1 and RU-2. It will recognize a Goodwill impairment gain for RU-3. A goodwill impairment gain results when the fair value is higher than the book value of the net realizable assets.
