Caesar Company acquired Illusions, Inc. three years ago, and the purchase includ
ID: 2611284 • Letter: C
Question
Caesar Company acquired Illusions, Inc. three years ago, and the purchase included $75,000 of goodwill. Illusion's goodwill now has a fair value of $60,000 minus how would Caesar account for this difference?
A. A journal entry will be made minus debiting Loss on Impairment of Goodwill for $15,000 and crediting Goodwill for $15,000.
B. The difference will be written off using an allowance account.
C. Goodwill is amortized minus usually on a straight line basis, so the annual amortization will be adjusted.
D. The account Goodwill will be debited for $15,000 and Loss on Goodwill will be credited for $15,000.
Explanation / Answer
Ans Ans A
A journal entry will be made – debiting Loss on Impairment of Goodwill for $15,000 and crediting Goodwill for $15,000. Loss on Impairment of Goodwill 15000 Goodwill 15000