In Reference to the Determination of Goodwill Impairment,which of the Following

question 27

Multiple Choice

In reference to the determination of goodwill impairment,which of the following statements is correct?

• A)The goodwill impairment test under FASB 142 is a three-step process.
• B)If the reporting unit's fair value exceeds its carrying value,goodwill is unimpaired.
• C)Under FASB 142,firms must first compare carrying values (book values)at the firm level.
• D)All of the above are correct.

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Definitions:

Effective-Interest Method

A method used in finance to systematically allocate the interest expense or income over the life of a financial asset or liability.

Interest Period

The span of time over which interest is calculated and charged on loans or investments.

Discount Amortization

The gradual write-off of the discount amount on bonds payable over the life of the bond to accurately reflect interest expense over time.

Straight-Line Method

A method of calculating depreciation of an asset by evenly spreading the cost over its useful life.