When goodwill is acquired under a business combination it is subject to an impairment test every:
A)year
B)two years
C)three years
D)five years.

Question

Quizplus · Accepted Answer

Goodwill is subject to an annual impairment test as per the International Financial Reporting Standards (IFRS). This test involves comparing the carrying value of the goodwill with its recoverable amount, which is the higher of the fair value less costs to sell and the value in use. If the carrying value exceeds the recoverable amount, an impairment loss must be recognized in the income statement. Therefore, option A is the correct answer. Options B, C, and D are not valid as they do not reflect the IFRS requirement for the frequency of the goodwill impairment test.

When Goodwill Is Acquired Under a Business Combination It Is