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To Recognize the Impairment of Goodwill Arising from a Business

Question 23

Multiple Choice

To recognize the impairment of goodwill arising from a business combination involving a partially owned subsidiary:

A) The subsidiary debits the Impairment Loss ledger account and credits the Goodwill account in its accounting records.
B) The parent company debits the Impairment Loss ledger account and credits the Goodwill account in its accounting records.
C) The parent company debits the Intercompany Investment Income ledger account and credits the Investment in Subsidiary Common Stock account in its accounting records.
D) The parent company prepares some other journal entry.

Correct Answer: