When is a goodwill impairment loss recognized?
A) Annually on a systematic and rational basis.
B) Never.
C) If both the fair value of a reporting unit and its associated implied goodwill fall below their respective carrying values.
D) If the fair value of a reporting unit falls below its original acquisition price.
E) Whenever the fair value of the entity declines significantly.

Question

Quizplus · Accepted Answer

A goodwill impairment loss is recognized if the fair value of a reporting unit and its associated implied goodwill fall below their respective carrying values. This impairment loss is recognized only when the implied goodwill (the excess of the fair value of the reporting unit over the fair value of the unit's net assets) is less than the carrying amount of goodwill. Goodwill is not amortized, but it is tested for impairment annually or whenever events or changes in circumstances indicate that it may be impaired.

When Is a Goodwill Impairment Loss Recognized