Directors Have Determined That Goodwill Acquired in 2014 Has Been

question 14

Multiple Choice

Directors have determined that goodwill acquired in 2014 has been impaired by $5000.What is the appropriate elimination entry for this impairment?

• A)
• \[\begin{array} { | l | l | r | r | }
• \hline & & & \\
• \hline \mathrm { Dr } & \text { Goodwill } & 5000 & \\
• \hline \mathrm { Cr } & \text { Retained earnings } & & 5000 \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { | l | l | r | r | }
• \hline & & & \\
• \hline \mathrm { Dr } & \text { Retained earnings } & 5000 & \\
• \hline \mathrm { Cr } & \text { Goodwill } & & 5000 \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | l | l | r | r | }
• \hline & & & \\
• \hline \mathrm { Dr } & \text { Goodwill } & 5000 & \\
• \hline \mathrm { Cr } & \text { Impairment loss - goodwill } & & 5000 \\
• \hline
• \end{array}\]
• D)
• \(\begin{array}{|l|l|r|r|}
• \hline & & & \\
• \hline \text { Dr } & \text { Impairment loss - goodwill } & 5000 & \\
• \hline \mathrm{Cr} & \text { Goodwill } & & 5000 \\
• \hline
• \end{array}\)

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Definitions:

Leased Equipment

Assets that are rented under a contract for a specified period of time, often with terms that specify usage rights and requirements.

GAAP

A collection of commonly followed accounting rules and standards for financial reporting, used primarily in the United States.

Expense Recognition

Expense Recognition is an accounting principle that dictates the specific conditions under which expenses are recognized and reported in financial statements.

Revenue Recognition

The accounting principle dictating how and when revenue is recognized on the financial statements, ensuring it reflects the transfer of promised goods or services to customers.