Regular Corp

question 54

Multiple Choice

Regular Corp. has four divisions. One of them, Yulon Products, was acquired on January 1, 2016, for $89,000,000, and recorded goodwill of $9,000,000 as a result of that purchase. Yulon Products is a reporting unit of the company. At December 31, 2017, Yulon Products had a fair value (including goodwill) of $68,000,000. The book value of the division's net assets (including goodwill) at December 31, 2017 was $79,000,000. What was the impairment loss for goodwill at December 31, 2017?

• A) $79,000,000
• B) $11,000,000
• C) $9,000,000
• D) $0

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Definitions:

Monopolistic Competition

An economic setup in which numerous firms offer products that are alike but not the same, enabling competition to revolve around quality, pricing, and promotional strategies.

Average Total Cost

The average cost per unit of output, calculated by dividing the total cost by the quantity of output produced.

Perfect Competition

A market structure characterized by a large number of small firms, a homogeneous product, perfect information, and free entry and exit, leading to price-taking behavior.

Long-Run Equilibrium

A state in which all firms in a market are earning normal profits, and there is no incentive for firms to enter or exit the market.