When Detroit Corp. bought Dunkirk Company several years ago, it recorded $800,000 goodwill. Today, the acquired goodwill has fair value of $650,000 and expected undiscounted cash flows of $875,000 from these net assets.

Which entry should be recorded?

a. Debit loss on impairment, $225,000; credit goodwill, $225,000

b. Debit loss on impairment, $150,000; credit goodwill, $150,000

c. Debit goodwill, $75,000; credit impairment gain, $75,000

d. No entry required; no impairment exists. d. $112,500