The Kiss Company (KC) has goodwill recorded in two CGUs, as defined using IFRS. These two...

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The Kiss Company (KC) has goodwill recorded in two CGUs, as defined using IFRS. These two CGUS make up one reporting unit (RU), as defined using US GAAP. In its 2012 annual impairment testing, KC decides not to use the qualitative assessment option under US GAAP and moves forward to performing the quantitative assessment impairment testing for both US GAAP and IFRS. In this process, KC gathers the following information: KC carries the first CGU at a value of $15 million, which includes $4.0 million of goodwill. The fair value is $10 million and the recoverable amount of the unit is $9.0 million. CCC carries the second CGU at a value of $10 million, which includes $1.0 million attributable to goodwill. The fair value of the CGU is $10 million and the recoverable amount of the unit is $10 million. The fair value of the net assets of the RU excluding goodwill is $16 million. KC has decided not to elect to use the option to perform a qualitative assessment for US GAAP. Compute the amount of impairment KC should record for its goodwill using both US GAAP and IFRS. The Kiss Company (KC) has goodwill recorded in two CGUs, as defined using IFRS. These two CGUS make up one reporting unit (RU), as defined using US GAAP. In its 2012 annual impairment testing, KC decides not to use the qualitative assessment option under US GAAP and moves forward to performing the quantitative assessment impairment testing for both US GAAP and IFRS. In this process, KC gathers the following information: KC carries the first CGU at a value of $15 million, which includes $4.0 million of goodwill. The fair value is $10 million and the recoverable amount of the unit is $9.0 million. CCC carries the second CGU at a value of $10 million, which includes $1.0 million attributable to goodwill. The fair value of the CGU is $10 million and the recoverable amount of the unit is $10 million. The fair value of the net assets of the RU excluding goodwill is $16 million. KC has decided not to elect to use the option to perform a qualitative assessment for US GAAP. Compute the amount of impairment KC should record for its goodwill using both US GAAP and IFRS.

Answer rating: 100% (QA)

Under US GAAP the impairment of goodwill is determined by comparing the fair value of the reporting unit RU with its carrying value which includes the ... View the full answer