Tri State Co. acquired the assets of Riley Co. for $1,200,000 in 2013. The estimated fair market value of the assets at the acquisition date was $1,000,000. Goodwill of $200,000 was recorded at acquisition. In 2014, because of negative publicity, one half of the goodwill acquired from Riley Co. was judged to be permanently impaired.
Required:
a. How will Tri-State account for the impairment of the goodwill?
b. Prepare the journal entry to record the permanent impairment of goodwill.