The first step in determining goodwillimpairment involves comparing the *implied value of a reporting unit to itscarrying amount (goodwill excluded).fair value of a reporting unit to itscarrying amount (goodwill included).Assets fair value of a reporting unit toO its carrying amount (goodwillincluded).fair value of a reporting unit to itscarrying amount (goodwill excluded).Page 5 of 6

Steps for determining the goodwill impairement includes If unit fair value is less than carrying…

Answered: implied value of a reporting unit to…

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 53RSCQ

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An impairment loss for goodwill is calculated as the difference between ________. Group of answer choices the fair value of the reporting unit (including goodwill) and the book value of the reporting unit (including goodwill) the implied fair value of goodwill and its book value the fair value of the reporting unit (including goodwill) and the fair value of its net assets (without goodwill) the book value of the reporting unit (including goodwill) and the book value of its net assets (without goodwill)
Which statement regarding goodwill is true? a. goodwill is an unidentifiable intangible assetb. internally developed goodwill should be capitalized while purchased goodwill should beexpensedc. goodwill can be defined as the value attached to the ability of a company to earn a higherthan normal rate of return on the book value of its identifiable assetsd. in some situations, FASB Statement No. 141 requires that negative goodwill be recorded
How is the goodwill impairment calculated? I thought it was by adding assets and subtracting the accounts payable for net assets. Then adding goodwill and subtracting the fair value
The reason goodwill is sometimes referred to as a master valuation account is because a. it represents the purchase price of a business that is about to be sold.b. it is the difference between the fair market value of the net tangible and identifiableintangible assets as compared with the purchase price of the acquired business.c. the value of a business is computed without consideration of goodwill and thengoodwill is added to arrive at a master valuation.d. it is the only account in the financial statements that is based on value, all otheraccounts are recorded at an amount other than their value.
Choose the correct.Goodwill recognized in a business combination must be allocated among a firm’s identified reporting units. If the fair value of a particular reporting unit with recognized goodwill falls below its carrying amount, which of the following is true?a. No goodwill impairment loss is recognized unless the implied value for goodwill exceeds its carrying amount.b. A goodwill impairment loss is recognized if the carrying amount for goodwill exceeds its implied value.c. A goodwill impairment loss is recognized for the excess of a reporting unit’s carrying amount over its fair value, not to exceed the carrying amount of goodwill.d. The reporting unit reduces the values assigned to its long-term assets (including any unrecognized intangibles) to reflect its fair value.
The unamortized excess account is a. the excess purchase cost that is attributable to goodwill. b. the excess purchase cost that is attributable to a bargain purchase. c. the excess purchase cost over the subsidiary’s net assets’ book value d. the excess purchase cost over the subsidiary’s net assets’ fair value.
iii) Where the NCI is measured at fair value at acquisition date, which of the following methods is being used? Partial goodwill method Fair value method Full goodwill method NCI goodwill method
Statement 1: When an item of asset is transferred to and from the classification investment property, carried using the cost model, the measurement basis at the date of transfer is the original cost.Statement 2: Any gain or loss from the disposal of the investment property shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset and shall be recognized in profit or lossStatement 3: If owner-occupied property is transferred to investment property that is to be carried at fair value, the difference between the carrying amount of the property and its fair value shall be included in profit or loss.Statement 4: If an entity determines that the fair value of an investment property is not reliably determinable on a continuing basis, the entity shall measure that investment property using the revaluation model. A. Only two of the statements are true. B. All statements are true. C. Only one of the statements is true. D. Only three…
Statement 1: When an item of asset is transferred to and from the classification investment property, carried using the cost model, the measurement basis at the date of transfer is the original cost.Statement 2: Any gain or loss from the disposal of the investment property shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset and shall be recognized in profit or lossStatement 3: If owner-occupied property is transferred to investment property that is to be carried at fair value, the difference between the carrying amount of the property and its fair value shall be included in profit or loss.Statement 4: If an entity determines that the fair value of an investment property is not reliably determinable on a continuing basis, the entity shall measure that investment property using the revaluation model. All statements are true. Only two of the statements are true. Only three of the statements are true. All statements are…
When a group of assets is acquired for a lump sum price, the total cost should be allocated to the individual assets based on their relative fair value, appraised value or assessed value. True False
Assuming the use of full goodwill approach, compute for the goodwill.
Which one of the following category goodwill lies? a. Fictitious asset b. Intangible asset c. Non-current asset d. Current asset

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