With respect to goodwill,an impairment
A)will be amortized over the remaining useful life.
B)is a two-step process which analyzes each business reporting unit of the entity.
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 analyses each business reporting unit of the entity. The first step involves comparing the carrying amount of the reporting unit, including goodwill, with its fair value. If the carrying amount exceeds the fair value, the second step involves calculating the goodwill impairment loss. Therefore, option B is the correct choice. Option A is incorrect because goodwill is not amortized but rather tested for impairment. Option C is incorrect because the impairment test is performed on each reporting unit and not on the entire firm. Option D is incorrect because the question refers to impairment of existing goodwill and not the creation of new goodwill during a purchase.

With Respect to Goodwill,an Impairment