Jericho Company recently acquired three businesses, recognizing goodwill in each acquisition. The acquired goodwill was allocated to
Question:
Jericho Company recently acquired three businesses, recognizing goodwill in each acquisition. The acquired goodwill was allocated to the three reporting units: Apple, Banana, and Carrot. Jericho provides the following information in performing the 2012 annual review for impairment:
| | Carrying Value | Fair Value | Valuation of Reporting Unit (including Goodwill) |
Apple | Tangible Assets | $300,000 | $320,000 | $525,000 |
| Trademarks | 20,000 | 10,000 | |
| Licenses | 85,000 | 90,000 | |
| Liabilities | 20,000 | 20,000 | |
| Goodwill | 130,000 | ? | |
| | | | |
Banana | Tangible Assets | $250,000 | $400,000 | $450,000 |
| Trademarks | 25,000 | 50,000 | |
| Licenses | 18,000 | 18,000 | |
| Goodwill | 140,000 | ? | |
| | | | |
Carrot | Tangible Assets | $120,000 | $120,000 | $215,000 |
| Unpatented Technology | 0 | 50,000 | |
| Customer List | 35,000 | 45,000 | |
| Goodwill | 75,000 | ? | |
Required:
Which of Jericho's reporting units require both steps to test for goodwill impairment? How much goodwill impairment should Jericho report for 2012?
How much goodwill impairment should Jericho report for 2012?