Xavier Enterprises has $500,000 of goodwill on the balance sheet.The company determines that an impairment has occurred for $100,000.Xavier Enterprises should
A)recompute the original purchase and restate all subsequent statements.
B)debit goodwill for $100,000.
C)credit goodwill for $100,000.
D)debit goodwill for $400,000.
E)credit goodwill for $400,000.

Question

Quizplus · Accepted Answer

When an impairment of goodwill occurs, the company should credit the goodwill account for the amount of the impairment, which in this case is $100,000, to reduce the carrying value of goodwill on the balance sheet.

Xavier Enterprises Has $500,000 of Goodwill on the Balance Sheet