Regular Corp

question 14

Multiple Choice

Regular Corp.has four divisions.One of them,Weeble Products,was acquired on January 1,2016,for $60,000,000,and recorded goodwill of $6,000,000 as a result of that purchase.At December 31,2017,Weeble Products had a fair value (including goodwill) of $37,000,000.and the book value of the company's net assets (without goodwill) was $44,000,000.The fair value of Weeble's net assets (without goodwill) at December 31,2017 was $33,000,000.What amount of loss on impairment of goodwill should Regular record in 2017?

• A)-0-
• B)$2,000,000
• C)$4,000,000
• D)$11,000,000

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Definitions:

Total Revenue

The total amount of money received by a company from sales of goods or services, before any expenses are subtracted.

Negative Economic Profits

A situation where a firm's total revenues are less than the total costs, including both explicit and implicit costs, leading to losses.

Accounting Profit

The total revenue of a business minus the explicit costs, representing the financial gain shown in the income statement.

Implicit Costs

The opportunity costs that arise from using assets, resources, or funds to undertake an action instead of another activity, not directly recorded in financial statements.