Goodwill Impairment Test

Assume that the equity method used with the Equity Investment account relating to a subsidiary has a reported balance of $6,250,000, including $619,000 of goodwill. You currently value that subsidiary at $5,625,000, and estimate that the fair value of the subsidiarys net assets is $5,375,000:

1. Should you perform a test for potential impairment of goodwill?

2. If so, do you conclude that goodwill is impaired?

3. Prepare the required journal entry ID where you find the goodwill asset to be impaired.