When Is a Goodwill Impairment Loss Recognized

question 33

Multiple Choice

When is a goodwill impairment loss recognized?

• A) Only after both a quantitative and qualitative assessment of the fair value of goodwill of a reporting unit.
• B) After only definitive quantitative assessments of the fair value of goodwill is completed.
• C) After only definitive qualitative assessments of the fair value of goodwill is completed.
• D) If the fair value of a reporting unit falls to zero or below its original acquisition price.
• E) Never.

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Definitions:

Straight-Line Method

A method of calculating depreciation of an asset, which assumes the asset will lose an equal amount of value each year over its useful life.

Residual Value

The estimated value that an asset will have at the end of its useful life, also known as salvage value.

Gain Or Loss

The difference between the selling price and the purchase price of an asset, resulting in a financial profit or loss.

Disposal Of Equipment

The process of selling, scrapping, or eliminating machinery or equipment that is no longer needed.