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:

Balance Sheet

A financial statement that presents a company's assets, liabilities, and shareholders' equity at a particular point in time, offering a snapshot of its financial condition.

Future Expenses

Anticipated costs or financial obligations a company expects to incur in the future.

Note Payable

A written promise to pay a specific sum of money at a future date, typically including interest payments.

Promissory Note

A financial instrument in which one party (the issuer) promises in writing to pay a determinate sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms.