Illustrations of Goodwill Impairment
Let’s suppose that a merger business combination resulted in the following:
Identifiable assets acquired (including all acquired intangible assets)
Goodwill from the combination
Let’s also say that two new reporting units are acquired by the combinor.
We need to assign
identifiable assets acquired and liabilities assumed to the new reporting units.
New RU A
New RU B
Identifiable assets acquired
Net assets assigned
The fair value of New Reporting Unit A is estimated to be $8,700,000, while the fair value of
New Reporting Unit B is estimated to be $4,700,000.
This would mean that the preliminary
assignment of goodwill would be as follows:
New Reporting Unit A ($8,700,000 – 7,800,000)
New Reporting Unit B ($4,700,000 – 3,400,000)