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WebHelper Inc
WebHelper Inc. acquired 100% of the outstanding stock of Silicon Chips Corporation (SCC) for $45.5 million, of which $16.0 million was allocated to goodwill. At the end of the current fiscal year, an impairment test revealed the following: fair value of SCC, $41.0 million; book value of SCC's net assets (including goodwill), $43.5 million.
What amount of impairment loss should WebHelper recognize?
Expert Solution
Impairment Loss = Book value of SCC's net assets - Fair value of SCC
here,
Book value of SCC's net assets= 43.5 million
Fair value of SCC= 41 million
Put the values in the formula;
Impairment Loss = $43.5 Million - $41 Million
= $2.5 Million
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