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)
$\begin{array}{|l|l|r|r|}
\hline & & & \
\hline \text { Dr } & \text { Impairment loss - goodwill } & 5000 & \
\hline \mathrm{Cr} & \text { Goodwill } & & 5000 \
\hline
\end{array}$

Question

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)
$\begin{array}{|l|l|r|r|}
\hline & & & \
\hline \text { Dr } & \text { Impairment loss - goodwill } & 5000 & \
\hline \mathrm{Cr} & \text { Goodwill } & & 5000 \
\hline
\end{array}$

Quizplus · Accepted Answer

The correct entry to record the impairment of goodwill involves debiting an impairment loss account and crediting the goodwill account. This reflects the decrease in the value of goodwill on the balance sheet and recognizes the impairment loss in the income statement.

Directors Have Determined That Goodwill Acquired in 2014 Has Been