With respect to the treatment of goodwill in the analysis of a company and determining the return on invested capital (ROIC),which of the following is most accurate?
A)Treat goodwill impairments as operating and subtract cumulative impairments from goodwill on the balance sheet.
B)Treat goodwill impairments as operating and add back cumulative impairments to goodwill on the balance sheet.
C)Treat goodwill impairments as nonoperating and add back cumulative impairments to goodwill on the balance sheet.
D)Treat goodwill impairments as nonoperating and subtract cumulative impairments from goodwill on the balance sheet.

Question

Quizplus · Accepted Answer

Goodwill impairments are considered nonoperating because they do not relate directly to the core operations of the business. Adding back cumulative impairments to goodwill on the balance sheet helps in analyzing the company's operational performance without the distortion caused by impairment charges.

With Respect to the Treatment of Goodwill in the Analysis