Rossie Equipment Manufacturing Co. acquired the assets of Alba Inc., a competitor, in Year 1. It recorded goodwill of $70,000 at acquisition. Because of defective machinery Alba had produced prior to the acquisition, it has been determined that all of the acquired goodwill has been permanently impaired.

Required
Explain how the recognition of the impairment of the goodwill will affect the Year 1 balance sheet, income statement, and statement of cash flows.