Question

Carla Vista Corporation acquired End-of-the-World Products on January 1, 2020 for $6750000, and recorded goodwill of $1270000 as a result of that purchase. At December 31, 2021, the End-of-the-World Products Division had a fair value of $5083000. The net identifiable assets of the Division (including goodwill) had a carrying value of $5790000 at that time. What amount of loss on impairment of goodwill should Carla Vista record in 2021

Answer 1

Answer:

$563,00

Explanation:

Calculation of Carla Vista Corporation amount of loss on impairment of goodwill should Carla Vista record in 2021:

Fair value - Identifiable assets carrying value $5790000

$5,083,000-$5,790,000

=$707,000

Therefore,

Goodwill $1,270,000- $707,000

=$563,000

Hence the amount of loss on impairment of goodwill should Carla Vista record in 2021 will be $563,000