F4/M8 Goodwill Impairment

Question 1

(T/F): Goodwill impairment cannot be reversed

Answer 1

True

Question 2

(T/F): Goodwill expenses are not capitalized

Answer 2

True

Question 3

(T/F): Under U.S. GAAP, Goodwill is calculated at the reporting unit level

Answer 3

True;

Goodwill of one reporting unit may be impaired, while the others may not

Question 4

2-step Test for Impairment under U.S. GAAP

Answer 4

1. Qualitative test ( >50% chance of impairment)
   
   • If it doesn’t fail Qualitative test, no impairment
2. Quantitative test
   
   • If FV < CV,
     
     • Goodwill = FV of unidentifiable assets

Question 5

(T/F): IFRS uses a Cash Generating Unit for Testing Impairment

Answer 5

True