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On 1 July 2020, Judds Ltd acquired all the share capital of Solace Ltd for...

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Accounting

On 1 July 2020, Judds Ltd acquired all the share capital of Solace Ltd for a consideration of $950,000. At the date of acquisition, the fair value of the identifiable net assets of Solace Ltd is $800,000. After the acquisition, the board of directors of Judds Ltd decided to impair goodwill arising from the acquisition by $15,000 for the financial year ended 30 June 2021 and an additional $20,000 for the year ended 30 June 2022. The consolidation adjustment to record goodwill impairment on 30 June 2022 is: 1. Dr Impairment loss $20,000; Dr Retained earnings $15,000; Cr Accumulated impairment $35,000 2. Dr Retained earnings $35,000; Cr Accumulated impairment $35,000 3. Dr Impairment loss $15,000; Dr Retained earnings $20,000; Cr Accumulated impairment $35,000 4. Dr Impairment loss $35,000; Cr Goodwill $35,000

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