Under IFRS, Which of the Following Statements Best Describes When

question 28

Multiple Choice

Under IFRS, which of the following statements best describes when goodwill should be tested for impairment?

• A) Goodwill should be tested for impairment when events or changes in circumstance 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:

Ending Inventory

The final value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.

FIFO

First-In, First-Out, an inventory valuation method where goods first bought are the first to be sold, assuming that the oldest inventory items are sold before newer ones.

Costs

The amount of money expended or resources used in the production of goods or in providing services.

Average Cost Method

An inventory valuation method wherein the cost of goods sold and ending inventory is determined by taking the weighted average of all purchases.