In 2018, a corporation purchased a small business for $250,000. The market value of the small business's assets was $400,000, and the market value of the liabilities was $200,000. The corporation recorded goodwill of $50,000 at the time of acquisition. At the end of 2019, it measured goodwill and found it had a remaining fair value of only $20,000. At year-end 2019, the corporation will ________.

Question

Quizplus · Accepted Answer

The fact that the goodwill value has decreased from $50,000 to $20,000 implies that there has been an impairment in the value of goodwill. Therefore, at year-end 2019, the corporation will have to record an impairment loss on goodwill.

In 2018, a Corporation Purchased a Small Business for $250,000