Question
LEVON is an online education company. At the end 2018 they acquired their biggest competitor. They started recognizing revenue for the acquisition in 2019 A
LEVON is an online education company. At the end 2018 they acquired their biggest competitor. They started recognizing revenue for the acquisition in 2019 A portion of their income statement appears below:
| 2017 | 2018 | 2019 | |
| Sales | 4096.7 | 4885.1 | 7401.8 |
| COGS | 2580.9 | 3077.6 | 5181.3 |
| Operating Income | 1515.8 | 1807.5 | 2220.5 |
| Impairment of Goodwill | 0 | 0 | 500 |
a. The CEO of LEVON is quite excited about the increase in operating income in 2019 that occurred after their acquisition. Are you as excited as LEVONs CEO? Why or why not?
b. What does the impairment of goodwill tell you and how does the impairment of goodwill impact net income? Explain.
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Accounting Tools For Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
6th Edition
111919167X, 9781119191674
