When Hydra Ltd. acquired the shares of Draco Ltd., one of the assets in Dracos statement of

Question:

When Hydra Ltd. acquired the shares of Draco Ltd., one of the assets in Draco’s statement of ﬁnancial position was $15,000 , which had been recognized by Draco upon its acquisition of a business from Valhalla Ltd.
Having prepared the acquisition analysis when preparing the consolidated ﬁnancial statements for Hydra, the group accountant has asked for your opinion.
Required
Provide advice on the following issues:
(a) How does the recording of by the subsidiary affect the accounting for the group’s ?
(b) If, in subsequent years, is impaired, for example by $10,000, should the impairment loss be recognized in the books and records of Hydra or as a consolidation adjustment?
Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...