WebHelper Inc. acquired 100% of the outstanding stock of Silicon Chips Corporati

Question

WebHelper Inc. acquired 100% of the outstanding stock of Silicon Chips Corporation (SCC) for $45 million, of which $15 million was allocated to goodwill. At the end of the current fiscal year, an impairment test revealed the following: fair value of SCC, $44 million; fair value of SCC’s net assets (excluding goodwill), $31 million; book value of SCC’s net assets (including goodwill), $42 million.

What amount of impairment loss should WebHelper recognize? (Enter your answers in millions, (i.e., 10,000,000 should be entered as 10)).

Explanation / Answer

If the fair value of an asset is less than its carrying value, impairment is said to take place.Since the Fair value of SSC is $44 million ,which is greater than the $42 million book value of SSC,($44 million> $42 Million) there is no impairment loss.

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