Problem

Goodwill recognized in a business combination must be allocated among a firm’s identified...

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 difference between the reporting unit’s fair value and carrying amount.

d. The reporting unit reduces the values assigned to its long-term assets (including any unrecognized intangibles) to reflect its fair value.

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Solutions For Problems in Chapter 3