In 2014, Azimuth Company purchased a small business for $500 000. The market value of the business's assets were $850 000, and the market value of the liabilities were $400 000. Azimuth recorded goodwill of $50 000 at time of acquisition. At the end of 2015, they measured the goodwill and found it had a remaining value of only $20 000. What will Azimuth have to do at year- end 2015?

Question

Quizplus · Accepted Answer

Goodwill is an intangible asset that represents the excess of the purchase price of a business over the fair value of its identifiable net assets. When the fair value of goodwill is less than its carrying value, an impairment loss must be recognized.

In 2014, Azimuth Company Purchased a Small Business for $500