Once a reporting unit is determined to have a fair value below its carrying value, the goodwill impairment loss is computed by comparing the:
A) fair value of the reporting unit and the fair value of the identifiable net assets.
B) carrying value of the goodwill to its implied fair value.
C) fair value of the reporting unit to its carrying amount (goodwill included).
D) carrying value of the reporting unit to the fair value of the identifiable net assets.

Question

Quizplus · Accepted Answer

The goodwill impairment loss is computed by comparing the carrying value of the goodwill to its implied fair value. This approach assesses whether the recorded goodwill is higher than what the market perceives its value to be, indicating impairment.

Once a Reporting Unit Is Determined to Have a Fair