Kingston Corporation Has $95 Million of Goodwill on Its Books

question 81

Multiple Choice

Kingston Corporation has $95 million of goodwill on its books from the 2011 acquisition of Reliant Motors. At the end of its 2013 fiscal year, management has provided the following information for its required goodwill impairment test ($ in millions) : Assuming that Reliant is considered a reporting unit for U.S. GAAP and a cash-generating unit for IFRS, the amount of goodwill impairment loss that Kingston should recognize according to U.S. GAAP and IFRS, respectively, is:

• A)Option a
• B)Option b
• C)Option c
• D)Option d

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Definitions:

Buyer Pays

A term indicating that the purchaser is responsible for the cost of shipping and insurance during transportation of goods.

Monetary Unit Assumption

An accounting assumption that requires that financial reports be expressed in a single monetary unit, or currency.

Economic Data

Statistical information reflecting the condition of an economy, such as GDP, employment rates, and inflation, used for analysis and policy-making.

Total Assets

The sum of everything of value owned by a business, including cash, securities, equipment, and real estate.