Accounting for goodwill
Springhill Co. purchased the assets of Canyon Co. for $1,000,000 in 2012. The estimated fair market value of the assets at the purchase date was $920,000. Goodwill of $80,000 was recorded at purchase. In 2013, because of negative publicity, one-half of the goodwill purchased from Canyon Co. was judged to be permanently impaired.
Required
Explain how the recognition of the impairment of the goodwill will affect the 2013 balance sheet, income statement, and statement of cash flows.
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