Question
Jen Corp. purchased Tina Co. 4 years ago and at that time recorded goodwill of $500,000. The Sinks Division's net assets, including goodwill, have a
Jen Corp. purchased Tina Co. 4 years ago and at that time recorded goodwill of $500,000. The Sinks Division's net assets, including goodwill, have a carrying amount of $1,100,000. The fair value of the division is estimated to be $1,000,000.The fair value of the division ($1,000,000) is less than the carrying amount of its assets ($1,100,000). Therefore, goodwill is not impaired.
A) Impairment loss should be always recorded regardless of the assessment.
B) Unfortunately, the assessment is incorrect since an impairment loss should be debited.
C) None of the above is correct
D) Nothing makes sense here.
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