On July 12, 2017, Browning Corporation acquired Smith Company in a business combination. As a result of the combination, the following amounts of goodwill were recorded for each of the three reporting units of the acquired company.
Question
1. On July 12, 2017, Browning Corporation acquired Smith Company in a business
combination. As a result of the combination, the following amounts of goodwill were recorded for each of the three reporting units of the acquired company.
Retailing $60,000
Service $40,000
Financing $80,000
Near the end of 2017 a new major competitor entered the company’s market and Browning was concerned that this might cause a significant decline in the value of goodwill. Accordingly, Browning computed the implied value of the goodwill for the three major reporting units at December 31, 2017 as follows:
Retailing $50,000
Service $20,000
Financing $120,000
Required: Determine the amount of impairment of goodwill that should be recorded by Carver at December 31, 2017.
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