In a Standard Audit Program for Goodwill Impairment Testing, If

question 126

Multiple Choice

In a standard audit program for goodwill impairment testing, if the original reporting unit no longer exists because operations have been fully integrated into operations of the parent company, which approach should the auditor take?

• A) Compare market value with carrying value. A market value less than carrying value is presumptive evidence that goodwill has been impaired.
• B) Compare fair value with realizable value. A fair value less than realizable value is presumptive evidence that goodwill has been impaired.
• C) Compare book value with realizable value. A book value less than realizable value is presumptive evidence that goodwill has been impaired.
• D) Compare book value with market value. A market value less than book value is presumptive evidence that goodwill has been impaired.

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Definitions:

Tax Cuts

Reductions in the amount of taxes imposed by a government on individuals or entities.

Economic Growth

An increase in the production of goods and services in an economy over a period of time, usually measured by the rise in GDP.

Federal Budget Deficit

A situation where the federal government's expenditures exceed its revenues within a given fiscal year.

Paradox of Thrift

If everyone tries to save more, they will all end up saving less.