Question

In 2015, Antle Inc. had acquired Demski Co. and recorded goodwill of $320 million as a result. The net assets (including goodwill) from Antle's acquisition of Demski Co. had a 2016 year-end book value of $655 million. Antle assessed the fair value of Demski at this date to be $775 million, while the fair value of all of Demski's identifiable tangible and intangible assets (excluding goodwill) was $712 million. The amount of the impairment loss that Antle would record for goodwill at the end of 2016 is:

A. None of these answer choices are correct.

B. 63 million

C. 0

D. 257 million

Answer 1

Answer:

Option (C) 0

Explanation:

Data provided in the question:

Recorded goodwill = $320 million

Year-end book value  = $655 million

Fair value of Demski at this date = $775 million

Demski's identifiable tangible and intangible assets (excluding goodwill) = $712 million

Now,

The fair value of Demski's Company i.e  $775 million is greater than the recorded book value on 2016 year-end.

Hence,

No impairment loss will be recorded by Antle's Company for goodwill at the end of 2016.

Therefore,

Option (C) 0