How goodwill is tested for impairment

Reference no: EM13129137

On january 1, 2008, line corporation acquired all of the common stock of staff company for 300,000 on the date, staff's identifiable assets had a fair value of 250,000. the assets acquired in the purchase of the staff are considered to be separate reporting unit of line corporation. the carrying value of staff's investment at december 31, 2008, is 310,000. the fair value of the net assets ( excluding goodwill) at the 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, 2008.

Reference no: EM13129137

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