Response to the following problem:
On July 1, 2005, Cumberland Products, Inc., purchased the assets of Jupiter Brands, Inc., for $12,000,000, a price reflecting a $3,200,000 goodwill premium. On December 31, 2007, Cumberland determined that the goodwill from the Jupiter acquisition was impaired and had a value of $1,000,000.
a. Determine the book value of the goodwill on December 31, 2007, prior to making the impairment adjusting entry.
b. Record the goodwill impairment adjusting entry for December 31, 2007.