Infinity Corporation acquired 80 percent of the common stock of an Egyptian company on January 1,...
Infinity Corporation acquired 80 percent of the common stock of an Egyptian company on January 1, 20X8.
The goodwill associated with this acquisition was $18,350. Exchange rates at various dates during 20X8
follow:
January 1, 20X8 1 E£ = $ 0.1835
December 31, 20X8 1 E£ = 0.1850
Average for 20X8 1 E£ = 0.1840
Goodwill suffered an impairment of 20 percent during the year. If the functional currency is the U.S.
dollar, how much goodwill impairment loss should be reported on Infinity's consolidated statement
of income for 20X8?
A) $3,680 B) $3,690 C) $3,700 D) $3,670
Homework Answers
Answer = D) $3670
Explanation:
Goodwill amount in dollar = $18350
As the functional currency is the U.S. dollar, no need to convert it in other currency.
Impairment loss is 20%
Therefore, goodwill impairment loss that should be reported on infinity's consolidated statement = $18350 × 20% = $3670
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