Question

A substitution elimination recognises consolidation goodwill of $60 000 at control date 1 January 20X2.

Goodwill impairment recognised in the following year is below:

Goodwill Impairment:

20X2 20X3 20X4

5,000 22,000 2,000

Required:

a) Record the eliminations for goodwill and its impairment at 31 December 20X2, 20X3 and

20X4 into general journal.

b) Record the eliminations of the goodwill and its impairment, if any, that are necessary 10

years after the control date, assuming no further impairment has been recognized. (4

marks)

Answer 1

Answer:

A) Journal entries regarding elimination for goodwill and its impairement:

Date/Year	Particulars	Debit (In $)	Credit (In $)
2012	Impairement of goodwill a/c Dr	5,000 $
	To Goodwill a/c Cr		5,000 $
-	{ Being goodwill charged for impairement due to change in its value in the year 2012)	-	-
----------	-----------------------------------------------------------------	----------	-----------
2013	Impairement of goodwill a/c Dr	22,000 $
	To Goodwill a/c Cr		22,000 $
-	{ Being goodwill charged for impairement due to change in its value in the year 2013)	-	-
----------	-----------------------------------------------------------------	----------	-----------
2014	Impairement of goodwill a/c Dr	2,000 $
	To Goodwill a/c Cr		2,000 $
-	{ Being goodwill charged for impairement due to change in its valuein the year 2014)	-	-

B)

If recognition of impairement is not done in the books of accounts , goodwill will be at the same position. Hence no changes in entries are required.

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