Chapter 3
Long-Term Assets
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On February 1, 2016 CN Corporation bought assets and liabilities of Lincoln Inc. for $300,000.
CN paid a premium for the purchase because Lincoln Inc. is a recognizable brand in the
market. Lincoln had assets of $600,000 and liabilities of $400,000.
Required
a) Prepare the journal entry for CN Corporation to record the purchase of Lincoln Inc.
Date
Account Title and Explanation
Debit
Credit
b) Due to an increase in the number of competitors in the market, on December 31, 2016 CN
Corporation reviewed all assets for any impairment. It was discovered that the goodwill
has a fair market value of only $85,000. Prepare the journal entry to record this impairment
to goodwill.
Date
Account Title and Explanation
Debit
Credit
