Goodwill impairment testing can involve comparing the recoverable amount of a cash-generating unit to its ________.
A)carrying value, excluding goodwill
B)carrying value, including goodwill
C)carrying value of tangible assets and the fair value of its intangible assets
D)fair value of tangible assets and the carrying value of its intangible assets

Question

Quizplus · Accepted Answer

Goodwill impairment testing involves comparing the recoverable amount of a cash-generating unit (CGU) to its carrying value, including goodwill. This is because goodwill is an intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets. The test determines if the value of goodwill is impaired, i.e., if the carrying amount of the CGU, including goodwill, exceeds its recoverable amount.

Goodwill Impairment Testing Can Involve Comparing the Recoverable Amount of a Cash-Generating