ncoln Company determines that an asset (goodwill) has been impaired by $0.6 mill

Question

ncoln Company determines that an asset (goodwill) has been impaired by $0.6 milli 10. IfLi on then which of the following will occur at the end of the current accounting period? asset is sold. A) No action will be taken to recognize its impairment until the B) A credit to the goodwl account will be recorded for the amount of the loss. C) A credit to retained earnings wll be recorded for the effect of the loss thereby bypassing the income statement. D) The impairment will not affect the accounts but will be disclosed in the E) None of the above will occur footnotes.

Explanation / Answer

Entry to record impairment loss will be
Loss on impairment $0.6 million
   Asset(Goodwill) Account $0.6 million.
Impairment loss must be recognised as and when the asset is found to be impaired. The asset account balance is decreased for the amount of loss incurred.
So, the answer is Option B

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