The fair value of net identifiable assets exclusive of goodwill 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 $335,000, what amount of goodwill impairment will be recognized for this unit?
A) $0
B) $10,000
C) $25,000
D) $35,000

Question

Quizplus · Accepted Answer

The carrying value of the net assets including goodwill is $350,000. The fair value of the reporting unit is $335,000, indicating an impairment of $15,000. Since the goodwill is $60,000, the impairment is limited to the goodwill amount, resulting in a $25,000 impairment ($60,000 - $35,000).

The Fair Value of Net Identifiable Assets Exclusive of Goodwill