Regular Corp. has four divisions. One of them, Weeble Products, was acquired on
ID: 2338053 • Letter: R
Question
Regular Corp. has four divisions. One of them, Weeble Products, was acquired on January 1, 2016, for S70,000,000, and recorded goodwill of S6,000,000 as a result of that purchase. At December 31, 2017, Weeble Products had a fair value (including goodwill) of $38,000,000. and the book value of the company's net assets (without goodwill) was $49,000,000. The fair value of Weeble's net assets (without goodwill) at December 31, 2017 was $33,500,000. What amount of loss on impairment of goodwill should Regular record in 2017? OA. -0 O B. $1,500,000 O C. $4,500,000 O D. $15,500,000Explanation / Answer
Impair
Impairment loss is excess of carrying amount of assets and its recoverable amount.
Recoverable amounts is higher of fair value of assets and value in use. In the given case, value in use is not mentioned
Hence the recoverable amount is fair value of assets.
So the carrying amount is book value of assets excluding goodwill i.e. $49,000,000. Fair value of assets excluding goodwill is $33,500,000.
Impairment loss is excess of $49,000,000 and $33,500,000 = $15,500,000.
Hence the answer is D.
Impairment loss is excess of carrying amount of assets and its recoverable amount.
Recoverable amounts is higher of fair value of assets and value in use. In the given case, value in use is not mentioned
Hence the recoverable amount is fair value of assets.
So the carrying amount is book value of assets excluding goodwill i.e. $49,000,000. Fair value of assets excluding goodwill is $33,500,000.
Impairment loss is excess of $49,000,000 and $33,500,000 = $15,500,000.
Hence the answer is D.
Impairment loss is excess of carrying amount of assets and its recoverable amount.
Recoverable amounts is higher of fair value of assets and value in use. In the given case, value in use is not mentioned
Hence the recoverable amount is fair value of assets.
So the carrying amount is book value of assets excluding goodwill i.e. $49,000,000. Fair value of assets excluding goodwill is $33,500,000.
Impairment loss is excess of $49,000,000 and $33,500,000 = $15,500,000.
Hence the answer is D.
ment loss is excess of carrying amount of assets and recoverable amount.
Recoverable amount is higher of fair value of assets and value in use. In the given case, only fair value is mentioned hence recoverable amount would be the fair value of assets.
So the carrying amount of assets is the book value excluding goodwill, i.e., $49,000,000.
Fair value of assets excluding goodwill is $ 33,500,000.
Impairment loss is excess of $49,000,000 and $33,500,000 = $15,500,000.
Hence the answer would be D.