Goodwill is an intangible asset that firms report on their respective balance sheet as a result of acquiring other firms. Goodwill has an indefinite life and should not be amortized. It should however be tested for impairment whenever the firms’ financial statements are used for public or are submitted for external financing. In a two-page analysis, 1). Describe the procedures prescribed by both USGAAP and IFRS to test for goodwill impairment and,2). How do these procedures differ from the procedure followed for testing the impairment of a fixed asset or an intangible asset that has a finite life.
Goodwill is an intangible asset that firms report on their respective balance sheet as a result of acquiring other firms. Goodwill has an indefinite life and should not be amortized. It should however be tested for impairment whenever the firms’ financial statements are used for public or are submitted for external financing. In a two-page analysis, 1). Describe the procedures prescribed by both USGAAP and IFRS to test for goodwill impairment and,2). How do these procedures differ from the procedure followed for testing the impairment of a fixed asset or an intangible asset that has a finite life.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
In a two-page analysis,
1). Describe the procedures prescribed by both USGAAP and IFRS to test for goodwill impairment and,
2). How do these procedures differ from the procedure followed for testing the impairment of a fixed asset or an intangible asset that has a finite life.
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