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12 September, 11:37

Pout Company reports assets with a carrying value of $420,000 (including goodwill with a carrying value of $35,000) assigned to an identifiable reporting unit purchased at the end of the prior year. The fair value of the reporting unit is currently $350,000, and the carrying value of the net assets held by the reporting unit is $330,000. At the end of the current period, Pout should report goodwill of

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  1. 12 September, 11:52
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    Pout should report goodwill of $20,000

    Explanation:

    Pout Company's assets with a carrying value = $420,000

    Goodwill = $35,000

    Pout Company's net assets carrying value = 420,000-35,000 = $385,000

    Fair value of the reporting unit is currently = $350,000

    Fair Value of Net assets = 350000-35000 = $315,000

    Carrying value of the net assets held by the reporting unit = $330,000

    Goodwill Impairment = 330,000 - 315,000 = 15,000

    Value of Goodwill after impairment = 35,000-15,000 = 20,000
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