Goodwill was purchased when a business was acquired. When it is determined that the goodwill is impaired, the credit is usually made to
A) the Goodwill account.
B) an Accumulated Impairment Loss account.
C) a Deferred Credit account.
D) a Shareholders' Equity account.

Question

Quizplus · Accepted Answer

When goodwill is impaired, the credit is usually made to an Accumulated Impairment Loss account. This account is a contra asset account and is used to reduce the carrying amount of the asset. It is important to note that impairment losses reduce the value of the asset and, therefore, reduce the total equity of the company.

Goodwill Was Purchased When a Business Was Acquired