In a standard audit program for goodwill impairment testing, if the original reporting unit no longer exists because operations have been fully integrated into operations of the parent company, which approach should the auditor take?
A) Compare market value with carrying value. A market value less than carrying value is presumptive evidence that goodwill has been impaired.
B) Compare fair value with realizable value. A fair value less than realizable value is presumptive evidence that goodwill has been impaired.
C) Compare book value with realizable value. A book value less than realizable value is presumptive evidence that goodwill has been impaired.
D) Compare book value with market value. A market value less than book value is presumptive evidence that goodwill has been impaired.

Question

Quizplus · Accepted Answer

When the original reporting unit no longer exists, the auditor should compare the book value with the market value of the integrated operations. If the market value is less than the book value, it indicates potential goodwill impairment.

In a Standard Audit Program for Goodwill Impairment Testing, If