A company reports the following intangibles at December 31, 2019, prior to impairment testing:
Book value
Customer lists
$1,500,000
Brand names
$5,200,000
Goodwill
$8,000,000
The customer lists have a limited life, and amortization expense has already been properly recorded. The brand names have indefinite lives. The goodwill is allocated to Divisions 1 and 2 following U.S. GAAP.
Assume the company bypasses the qualitative assessment for both the brand names and the goodwill. On December 31, 2019, the following information is available:
Division 1
Division 2
Book value of goodwill
$1,600,000
$6,400,000
Fair value of division
$14,000,000
$20,000,000
Book value of division
$16,000,000
$19,500,000
Intangible asset
Total expected future cash inflows, undiscounted
Total expected future cash inflows, discounted
Customer lists
$1,600,000
$1,200,000
Brand names
$4,000,000
$3,400,000