Destin Company recently acquired several businesses andrecognized goodwill in each acquisition. Destin has allocated theresulting goodwill to its three reporting units: Sand Dollar, SaltyDog, and Baytowne. Destin opts to skip the qualitative assessmentand therefore performs a quantitative goodwill impairment reviewannually.
In its current year assessment of goodwill, Destin provides thefollowing individual asset and liability values for each reportingunit:
| Carrying Amounts | Fair Values |
| Sand Dollar | | | | | | |
| Tangible assets | $ | 229,000 | | $ | 239,900 | |
| Trademark | | 269,000 | | | 249,000 | |
| Customer list | | 98,250 | | | 116,550 | |
| Goodwill | | 163,400 | | | ? | |
| Liabilities | | (39,250 | ) | | (39,250 | ) |
| Salty Dog | | | | | | |
| Tangible assets | $ | 252,000 | | $ | 252,000 | |
| Unpatented technology | | 173,000 | | | 124,250 | |
| Licenses | | 134,000 | | | 153,400 | |
| Goodwill | | 160,500 | | | ? | |
| Baytowne | | | | | | |
| Tangible assets | $ | 190,500 | | $ | 201,500 | |
| Unpatented technology | | 0 | | | 125,250 | |
| Copyrights | | 69,750 | | | 108,050 | |
| Goodwill | | 120,000 | | | ? | |
|
The fair values for each reporting unit (including goodwill) are$708,700 for Sand Dollar, $699,650 for Salty Dog, and $716,800 forBaytowne. To date, Destin has reported no goodwill impairments.
Determine which of Destin’s reporting units require both stepsto test for goodwill impairment.
How much goodwill impairment should Destin report this year?
