FAR 4.8 - Goodwill, Including Impairment

Question 1

Under the acquisition method, goodwill is the :

Answer 1

Excess of the acquired entity’s FV over the FV of the entity’s net assets

Question 2

Under the equity method, goodwill is the :

Answer 2

Excess of the stock purchase price over the FV of net assets acquired

Question 3

There is a goodwill impairment if:

Answer 3

Carrying value of reporting unit > fair value of the reporting unit