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:

Directors

People selected by the corporation's shareholders to supervise the administration and strategize decisions for the company.

Shareholder's Meeting

A gathering of a company's shareholders where important issues are discussed, and decisions are made about the company's affairs.

Proxy

Authorization to represent a corporate shareholder to serve as his or her agent and vote his or her shares in a certain manner.

Greater-Than-Majority Vote

A voting requirement in decision-making processes that necessitates more than 50% of the votes to pass a motion or make a decision.