Questions are around the topic of Impairment Testing and historical cost concept
ID: 2773536 • Letter: Q
Question
Questions are around the topic of Impairment Testing and historical cost concept regarding goodwill. Please assist in answering all questions. I greatly appreciate the assistance, thank you.
1). Defines impairment, goodwill and qualitative assessment.
2). Provide an impairment and an explanation of its impact on financial statements.
3). What are the the benefits of impairment recording to financial statement users.
4). What are the qualitative assessment option and the factors entities should consider before performing a qualitative assessment.
5). What are the motivation for using a qualitative test for impairment.
6). What are the impairment testing will impact the firm and users of financial statements.
Explanation / Answer
1). Defines impairment, goodwill and qualitative assessment
Impairment test is used to identify potential impairment, making comparison of the fair value of a reporting unit with its carrying amount including goodwill.
Goodwill means when carrying value of the goodwill exceeds the fair value, then it considered to be impaired.
Qualitative Assessment in that an entity has assess qualitative factors to determine fair value of reporting unit or an entity has an unconditional option to bypass the qualitative assessment and proceeds further to perform goodwill impairment.
2). Provide impairment and an explanation of its impact on financial statements.
Impairment occurs when a company pays more than book value for a set of assets and must late adjust the book value of goodwill. It will directly impact on financial statement as
3). what are the benefits of impairment recording to financial statement users.
4). What are the qualitative assessment option and the factors entities should consider before performing a qualitative assessment.
Entities should consider below mention factor before performing a qualitative assessment.
5). What are the impairment testing will impact the firm and users of financial statements.
The Impairment will impact the firm and users of financial statements are…
Decline in overall financial performance:
Events affecting a reporting unit:
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.