On January 1, 2015, Alda Solutions paid $200,000 to acquire Fancy Phones, Inc, an electronic gadget-advertising website
At the time of the acquisition, Fancy Phone's balance sheet reported total assets of $200,000 and liabilities of $100,000. The fair market value of Fancy Phone's assets was $200,000. The fair market value of its liabilities was $100,000. At the end of 2018, goodwill was measured, and its fair value was determined to be $60,000. Record the impairment of goodwill.
What will be an ideal response
Impairment Loss 40,000
Goodwill 40,000 .Purchase price to acquire Fancy Phones $200,000
Market value of Fancy Phones's assets $200,000
Less: Market value of Fancy Phones's liabilities 100,000
Less: Market value of Fancy Phones's net assets 100,000
Goodwill $100,000
Impairment Loss = $100,000 - $60,000 = $40,000
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