Which of the Following Statements Best Describes When Goodwill Should

question 35

Multiple Choice

Which of the following statements best describes when goodwill should be tested for impairment under Private Entity GAAP?

• A)Goodwill should be tested for impairment when events or changes in circumstances indicate that impairment may have occurred.
• B)Goodwill should be tested annually for impairment regardless of the circumstances.
• C)Goodwill should be tested for impairment annually and whenever events or changes in circumstance indicate that impairment may have occurred.
• D)Goodwill should only be tested for impairment when the company follows a policy to amortize its goodwill.

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive.

Equilibrium

A state of balance in a market or economy where supply equals demand, with no external influences causing disruption.

Market

Any structure that allows buyers and sellers to exchange any type of goods, services, and information.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive in the market.