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Ne4ueva [31]
3 years ago
5

On December 31, the fair value of Blossom is estimated to be $820,800. The carrying value of Blossom’s net identifiable assets,

including the goodwill, at year-end is $855,000. Prepare Cullumber’s journal entry, if necessary, to record impairment of goodwill.
Business
1 answer:
Ira Lisetskai [31]3 years ago
8 0

Answer:

Dr goodwill impairment   $34200

Cr goodwill                                      $34200

Explanation:

The fact that the fair value of  Blossom’s net identifiable assets is less than the  carrying value is a strong indication that the goodwill has been impaired and the impairment is computed thus:

Goodwill impairment=Fair value of net assets-carrying value

fair value of net assets=$820,800

Carrying value of net assets=$855,000

goodwill impairment=$855,000-$820,800=$34200

The double entries would be a debit to goodwill impairment loss account in the statement of profit or loss and a credit to goodwill.

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