Answered

Discover the answers you need at Westonci.ca, a dynamic Q&A platform where knowledge is shared freely by a community of experts. Get immediate and reliable answers to your questions from a community of experienced professionals on our platform. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.

In 2010,Chesley Inc. acquired Corrigan Ltd. in a hostile takeover. However, the expected synergies never materialized. In 2013, Chesley decided to write-off $45 million of Goodwill on the financial statements to recognize that the Goodwill had become impaired.Which of the following items would be decreased by the impairment of Goodwill?
a- Total Assetsb- Net Incomec- Cash from Operating Activitiesd- Cash from Financing Activitiese- Cash from Investing Activities

Sagot :

Zviko

Answer:

a- Total Assets

Explanation:

Impairment write downs are not cash related events but an accounting entry made to reduce the carrying amount when Carrying Amount of an Asset is found to be greater than the Recoverable Value of the Asset.

Carrying Amount of an Asset is Cost less Accumulated depreciation of an asset. While the Recoverable Value of the Asset is the higher of Fair Value and Value in use of an asset.

Therefore, only Total Assets decrease as a result of impairment of Goodwill.

Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. We're here to help at Westonci.ca. Keep visiting for the best answers to your questions.