Twilight Corporation acquired End-of-the-World Products on January 1, 2008 for $2,000,000, and recorded goodwill of $375,000 as a result of that purchase.At December 31, 2008, the End-of-the-World Products Division had a fair value of $1,700,000.The net identifiable assets of the Division (excluding goodwill) had a fair value of $1,450,000 at that time.What amount of loss on impairment of goodwill should Twilight record in 2008?
A)$ -0-
B)$125,000
C)$175,000
D)$300,000

Question

Quizplus · Accepted Answer

The correct answer is B. The loss on impairment of goodwill is $125,000. This is calculated as the difference between the fair value of the net identifiable assets ($1,450,000) and the carrying value of the goodwill ($375,000).

Twilight Corporation Acquired End-Of-The-World Products on January 1, 2008 for $2,000,000