On August 31, 2020, Kennison Company paid $1,050,000 to acquire all of the common stock of Lawrence Company, which became a division of Kennison. Lawrence reported the following balance sheet at the time of the acquisition:

Assets		Liabilities and Stockholders Equity
Cash	$ 960,000	Accounts payable	$200,000
Accounts receivable	400,000	Long-term note payable	1,300,000
PP&E (net)	800,000	Total liabilities		1,500,000
Trademarks	70,000	Common stock	$250,000
		Retained earnings	480,000	730,000
Total assets	$2,230,000	Total liabilities and stockholders equity		$2,230,000

Kennison and Lawrence agree that the fair market value equals to the reported value for all assets and liabilities.

On December 31, 2021, Lawrence reports the following balance sheet information:

Current assets	$1,600,000
Noncurrent assets (including goodwill recognized in purchase)	1,000,000
Current liabilities	(500,000)
Long-term liabilities	(1,100,000)

It is determined that the fair value of the Lawrence division is $1,200,000 on December 31, 2021.

(Note: you may not use all rows/columns of the provided tables)

Instructions

(1) Compute the amount of goodwill recognized, if any, on August 31, 2020. (3 points)

(2) Prepare the entry to record the purchase of Lawrence on Kennisons books. (4 points)

Account	Debit	Credit

(3) Determine the impairment loss, if any, to be recorded on December 31, 2021. (3 points)

impairment loss is recorded, because .

(4) Assume that the fair value of the Lawrence division is $800,000 instead of $1,200,000 on December 31, 2021. (5 points)

(a) Find out the impairment loss (if any) of Goodwill on December 31, 2021. (3 points)

(b) Prepare the journal entry to record the impairment loss of Goodwill. If there is no impairment loss, write "none needed." (2 points)

Account	Debit	Credit