With respect to goodwill,an impairment
A)will be amortized over the remaining useful life.
B)is a two-step process which first compares book value to fair value at the business reporting unit level.
C)is a one-step process considering the entire firm.
D)occurs when asset values are adjusted to fair value in a purchase.

Question

Quizplus · Accepted Answer

Goodwill impairment is a two-step process that involves comparing the carrying value (book value) of the reporting unit to its fair value. If the carrying value exceeds the fair value, then a second step is performed to calculate the amount of impairment loss, which is the difference between the carrying value and the implied fair value of goodwill. This process is conducted at the business reporting unit level, not for the entire firm. Goodwill is not amortized over its useful life but is tested for impairment at least annually or whenever there is a triggering event that may indicate impairment. Goodwill can also arise when asset values are adjusted to fair value in a purchase, but this is not the only scenario for creating goodwill.

With Respect to Goodwill,an Impairment