Goodwill Impairment Testing Can Involve Comparing the Recoverable Amount of a Cash-Generating

question 25

Multiple Choice

Goodwill impairment testing can involve comparing the recoverable amount of a cash-generating unit to its ________.

• A)carrying value, excluding goodwill
• B)carrying value, including goodwill
• C)carrying value of tangible assets and the fair value of its intangible assets
• D)fair value of tangible assets and the carrying value of its intangible assets

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Definitions:

Unit Product Costs

The calculated cost of producing one unit of a product, including direct materials, labor, and overhead.

Parts Administration

The process and activities involved in managing and overseeing the inventory, ordering, and supply of parts within an organization.

Unit-Level Activity

Activities that vary directly with the production volume such as the use of raw materials or energy consumed during manufacturing.

Batch-Level Activity

Activities and costs incurred for a batch of products, rather than for each individual unit or the entire production process.