Springhill Co purchased the assets of Canyon Co for $1,000,000 in 2012 The estimated fair market value of the assets at the purchase date was $920,000 Goodwill of $80,000 was recorded at purchase In 2013, because of negative publicity, one half of the goodwill purchased from Canyon Co was judged to...

The permanent impairment of 40000 80000 x w ...

Springhill Co. purchased the assets of Canyon Co. for $1,000,000 in 2012. The estimated fair market value

Question:

Springhill Co. purchased the assets of Canyon Co. for $1,000,000 in 2012. The estimated fair market value of the assets at the purchase date was $920,000. of $80,000 was recorded at purchase. In 2013, because of negative publicity, one-half of the goodwill purchased from Canyon Co. was judged to be permanently impaired.

Required
Explain how the recognition of the impairment of the goodwill will affect the 2013 balance sheet, income statement, and statement of cash flows.

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...