On January 1,20X8,Line Corporation Acquired All of the Common Stock

question 57

Essay

On January 1,20X8,Line Corporation acquired all of the common stock of Staff Company for $300,000.On that date,Staff's identifiable net assets had a fair value of $250,000.The assets acquired in the purchase of Staff are considered to be a separate reporting unit of Line Corporation.The carrying value of Staff's investment at December 31,20X8,is $310,000.The fair value of the net assets (excluding goodwill)at that date is $220,000 and the fair value of the reporting unit is determined to be 260,000.
Required:
1)Explain how goodwill is tested for impairment for a reporting unit.
2)Determine the amount,if any,of impairment loss to be recognized at December 31,20X8.

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Definitions:

Phrenic Nerve

The nerve that originates in the neck and passes down between the lung and heart to reach the diaphragm, playing an essential role in breathing.

Motor Activity

Refers to any physical movement produced by skeletal muscles that results in energy expenditure.

Heart Rate

The number of heartbeats per unit of time, usually measured in beats per minute (bpm), indicating cardiovascular health and fitness.

Brachial Plexus

A network of nerve fibers that runs from the spine through the neck, the armpit region, and into the arm, providing movement and sensation to the arm, shoulder, and hand.