Computing the amount of impairment loss. Tillis Corporation acquired the assets of Kieran Corporation (Kieran) on January 1, 2006, for $2,400,000. On this date the fair values of the assets of Kieran were as follows: land, $400,000; building, $600,000; equipment, $900,000. On June 15, 2008, a competitor introduced a new product that will likely significantly affect future sales of Kieran's products. It will also affect the value of Kieran's property, plant, and equipment because of their specialized nature in producing Kieran's existing products. The following information relates to the property, plant, and equipment of Kieran on June 15, 2008:
|
Carrying Value
|
Undiscounted Cash flows
|
Fair Value
|
|
Land
|
$ 550,000
|
$575,000
|
$550,000
|
|
Building.
|
580,000
|
600,000
|
580,000
|
|
Equipment
|
1,200,000
|
950,000
|
800,000
|
The fair value of Kieran as an entity on June 15, 2008, is $2,200,000.
Compute the amount of impairment loss recognized on each of Kieran's property, plant, and equipment and on goodwill on June 15, 2008, under U.S. GAAP.