A company reports the following intangibles at December 31, 2019, prior to impairment testing: Book value Customer
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Question:
A company reports the following intangibles at December 31, 2019, prior to impairment testing:
| Book value | |
|---|---|
| Customer lists | $1,500,000 |
| Brand names | 5,200,000 |
| Goodwill | 8,000,000 |
The customer lists have a limited life, and amortization expense has already been properly recorded. The brand names have indefinite lives. The goodwill is allocated to Divisions 1 and 2 following U.S. GAAP.
Assume the company bypasses the qualitative assessment for both the brand names and the goodwill. On December 31, 2019, the following information is available:
| Division 1 | Division 2 | |
|---|---|---|
| Book value of goodwill | $1,600,000 | $ 6,400,000 |
| Fair value of division | 14,000,000 | 20,000,000 |
| Book value of division | 16,000,000 | 19,500,000 |
| Intangible asset | Total expected future cash inflows, undiscounted | Total expected future cash inflows, discounted |
|---|---|---|
| Customer lists | $1,600,000 | $ 1,200,000 |
| Brand names | 4,000,000 | 3,400,000 |
Impairment loss for 2019 for the customer lists and brand names, following U.S. GAAP, is
A. $ 0
B. $ 300,000
C. $1,800,000
D. $2,100,000
Expert Answer:
1800000 Particular Fair Value Book Value Impairment Loss Customer Lists 1200000 15000... View the full answer
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