While Performing a Goodwill Impairment Test, the Company Had the Following

question 39

Multiple Choice

While performing a goodwill impairment test, the company had the following information:
$\begin{array}{llr} \text {Estimated implied fair value of reporting unit } &\$420,000\\ \text {Fair value of net assets on date of measurement (without goodwill) } &\$ 400,000 \\ \text { Existing net book value of reporting unit (without goodwill) } & \$ 380,000\\ \text { Book value of goodwill} & \$ 60,000\\\end{array}$

Based upon this information the proper conclusion is:

• A)The company should recognize a goodwill impairment loss of $20,000.
• B)Goodwill is not impaired.
• C)The company should recognize a goodwill impairment loss of $40,000.
• D)The company should recognize a goodwill impairment loss of $60,000.

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Definitions:

Administrative Expenses

Costs related to the management and general operations of a business, such as salaries of senior executives, legal and financial services.

Romanticizing Risk

Romanticizing risk involves perceiving potential dangers and uncertainties in overly positive or idealized ways, often ignoring the possible negative outcomes.

Financially Hard-pressed

A situation or condition where an individual or organization is experiencing financial strain, often leading to budget constraints and difficult financial decisions.

Riskier Projects

Projects that involve a higher level of uncertainty and potential for loss or failure, often seeking greater rewards or breakthrough results.