Question

Cullumber Corporation acquired End-of-the-World Products on January 1, 2020 for $6450000, and recorded goodwill of $1210000...

Cullumber Corporation acquired End-of-the-World Products on January 1, 2020 for $6450000, and recorded goodwill of $1210000 as a result of that purchase. At December 31, 2021, the End-of-the-World Products Division had a fair value of $4789000. The net identifiable assets of the Division (including goodwill) had a carrying value of $5490000 at that time. What amount of loss on impairment of goodwill should Cullumber record in 2021?

$960000
$1661000
$0
$701000
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Answer #1

Ans:

Purchase cost : $6,450,000 including Goodwil $1,210,000

Carrying Value fof Assets : $5,490,000

Fair Value of Assets on that date : $4,789,000

Inpairment of Goodwill : Impairment of assets to be recorded if fair Value of assets is less than the Carrying Value of All Identifiable assets.

So Impairment of Goodwill :

:Carrying value of all assets - Fair Value of Division:

$5,490,000 - $4,789,000 = $701,000

So Correct answer is Option D.

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