Question

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

Answer 1

Pout should report goodwill of $20,000

Step-by-step 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