While Performing a Goodwill Impairment Test, the Company Had the Following

question 32

Multiple Choice

While performing a goodwill impairment test, the company had the following information: $\begin{array}{ll}\text { Estimated implied fair value of reporting unit (without goodwill) } & \$ 420,000 \\\text { Existing net book value of reporting unit (without goodwill) } & \$ 380,000\\\text { Book value of goodwill }&\$60,000\end{array}$ Based upon this information the proper conclusion is:

• A) The existing net book value plus goodwill is in excess of the implied fair value, therefore, no adjustment is required.
• B) The existing net book value plus goodwill is less than the implied fair value plus goodwill, therefore, no adjustment is required.
• C) The existing net book value plus goodwill is in excess of the implied fair value, therefore, goodwill needs to be decreased.
• D) The existing net book value is less than the estimated implied fair value; therefore, goodwill needs to be decreased.

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Definitions:

Technological Innovations

The introduction of new technologies or methods that significantly improve products, processes, or services, often driving economic growth and societal change.

Macro-Level Perspective

A social science perspective that focuses on large-scale patterns and processes that characterize society as a whole.

Constraints

Factors or conditions that limit or restrict choices, actions, or outcomes within a given context or system.

Large-Scale Patterns

Broad trends or structures in society that affect groups and institutions in significant ways.