The first step in testing for impairment of goodwill is to
A) measure the fair value of the reporting unit and the fair value of the identifiable assets of the reporting unit.
B) compare the fair value of the reporting unit with its book value, including goodwill.
C) compare the fair value of the reporting unit with its book value, excluding goodwill.
D) assess qualitative factors that indicate whether the fair value of the reporting unit is greater or less than its carrying value.

Question

Quizplus · Accepted Answer

The first step in testing for impairment of goodwill is to assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. This qualitative assessment helps decide if further quantitative testing is necessary.

The First Step in Testing for Impairment of Goodwill Is