In 2018, Martin Corp. acquired Glynco and recorded goodwill of $56 million. Martin considers Glynco a separate reporting unit. By the end of 2021, the net assets (including goodwill) of Glynco are $331 million and its estimated fair value is $263 million. The amount of the impairment loss that Martin would record for goodwill at the end of 2021 is:

Question

Annalise Ferrell

Business

18 December, 01:54

In 2018, Martin Corp. acquired Glynco and recorded goodwill of $56 million. Martin considers Glynco a separate reporting unit. By the end of 2021, the net assets (including goodwill) of Glynco are $331 million and its estimated fair value is $263 million. The amount of the impairment loss that Martin would record for goodwill at the end of 2021 is:

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Landon Boone · Answer 1

Answer: $56 million

Explanation:

Goodwill is an intangible asset that I generated from the good reputation of a company.

The impairment loss to Goodwill to be recorded is calculated thus,

Impairment loss = Carrying value - fair value

So plugging in the figures would give us,

= $331 - $263

= $68 million

The amount of impairment loss that Martin would therefore record for Goodwill at the end of 2021 is $56 million.

This number would be $68 million is Goodwill was up to or more than that nimber. But since it is not, we are limited to the actual amount of Goodwill.

If you have any questions or need any clarification do react or comment.