One Year After Acquisition Date, Acquired Goodwill Was Regarded as Having

question 32

Multiple Choice

One year after acquisition date, acquired goodwill was regarded as having become impaired by $10 000. The appropriate consolidation adjustment in relation to the impairment will include the following line:

• A) DR Goodwill $10 000
• B) CR Impairment loss $10 000
• C) CR Accumulated impairment losses $10 000
• D) CR Business combination valuation reserve $10 000

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Definitions:

Outstanding Accounts Receivable

Amounts owed to a business by its customers for goods or services delivered but not yet paid for.

Income Statement Approach

A method used to determine income tax liabilities by examining the revenues, expenses, gains, and losses reported on a company's income statement.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.

Bad Debts

Accounts receivable that a company does not expect to collect and therefore writes off as a loss.