In 2012,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 2013,they measured the goodwill and found it had a remaining value of only $20,000.What will Azimuth have to do at year-end 2013?

Question

Quizplus · Accepted Answer

Azimuth will have to record a loss on goodwill because the remaining value of goodwill has decreased from $50,000 to $20,000. This decrease is an impairment of goodwill, and according to accounting standards, the impairment of goodwill should be recorded as a loss in the income statement.

In 2012,Azimuth Company Purchased a Small Business for $500,000