In its fiscal year 2020, Tapestry, Inc., the company that makes Coach and Kate Spade bags as well as Stuart Weitzman, reported a $210.7 million charge for goodwill impairment. Referring to Tapestry’s 2020 financial statements and any other information from the media, address the following:
1. Which of Tapestry’s reporting units suffered a 2020 goodwill impairment? What other Tapestry intangible asset declined due to impairment in 2020?
2. What were the underlying business reasons that required Tapestry recorded a goodwill impairment in 2020?
3. How did Tapestry reflect the 2020 goodwill impairment in its income statement and cash flow statement?
4. Describe in your own words the goodwill impairment testing performed by Tapestry in 2020 and the consequent loss measurement.