When Is a Goodwill Impairment Loss Recognized

question 97

Multiple Choice

When is a goodwill impairment loss recognized?

• A) Annually on a systematic and rational basis.
• B) Never.
• C) If both the fair value of a reporting unit and its associated implied goodwill fall below their respective carrying values.
• D) If the fair value of a reporting unit falls below its original acquisition price.
• E) Whenever the fair value of the entity declines significantly.

---

Definitions:

Capital

The financial resources available for use, such as cash, goods, or property, invested to create profit.

Shift of Assets

The reallocation or transfer of assets from one part of a company to another, or between companies, which can affect financial statements and tax liabilities.

Composition

An artistic arrangement of elements within a work of art, or the structure and arrangement of various components in a written document or piece of music.

Total Assets

The sum of everything of value owned by a business, including cash, property, inventory, and equipment.