Barcode Corporation acquired 70% of the common stock of a Russian company on January 1,20X6.The goodwill associated with this acquisition was $12,520.Exchange rates at various dates during 20X6 follow:

Goodwill suffered an impairment of 25 percent during the year.If the functional currency is the Russian ruble,how much goodwill impairment loss should be reported on Barcode's consolidated statement of income for 20X6?
A)$3,130
B)$3,100
C)$3,090
D)$3,080

Question

Barcode Corporation acquired 70% of the common stock of a Russian company on January 1,20X6.The goodwill associated with this acquisition was $12,520.Exchange rates at various dates during 20X6 follow:

Goodwill suffered an impairment of 25 percent during the year.If the functional currency is the Russian ruble,how much goodwill impairment loss should be reported on Barcode's consolidated statement of income for 20X6?
A)$3,130 
B)$3,100 
C)$3,090 
D)$3,080

Quizplus · Accepted Answer

The goodwill impairment loss should be calculated and reported in the functional currency of the Russian company, which is the ruble.

To calculate the goodwill impairment loss, we need to compare the carrying value of goodwill (which is $12,520) with its recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and the value in use.

Since the question does not provide any information about the fair value or the value in use, we cannot calculate the recoverable amount. However, we are told that the goodwill suffered an impairment of 25 percent during the year.

Therefore, we can calculate the impairment loss as follows:

Impairment loss = Carrying value of goodwill x Impairment rate
Impairment loss = $12,520 x 25%
Impairment loss = $3,130

Therefore, the answer is B) $3,100.

Barcode Corporation Acquired 70% of the Common Stock of a Russian