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riadik2000 [5.3K]
3 years ago
8

Write a team consensus response of 525 to 700 words to include the following: • Provide detailed rational of why goodwill must b

e adjusted for impairment. • List the tests for impairment. • Explain the meaning of a non cash impairment charge. Format your submission consistent with APA guidelines.
Business
1 answer:
grin007 [14]3 years ago
5 0

<u>1)Provide detailed rational of why goodwill must be adjusted for impairment</u>

<u>U.S. generally accepted accounting principles (GAAP) require companies to review their goodwill for impairment on an  annually basis at a reporting unit level. Events that are considered as the main causes of  goodwill impairment include deterioration in economic conditions, increased competition, loss of key personnel, and regulatory action</u>

Explanation:

<u>1)Provide detailed rational of why goodwill must be adjusted for impairment</u>

<u>U.S. generally accepted accounting principles (GAAP) require companies to review their goodwill for impairment on an  annually basis at a reporting unit level. Events that are considered as the main causes of  goodwill impairment include deterioration in economic conditions, increased competition, loss of key personnel, and regulatory action</u>

<u />

<u>2) List the tests for impairment. </u>

<u>Impairment test is an accounting procedure carried out to find out if an asset is impaired( i.e. whether the economic benefits that the asset embodies have dropped drastically.)</u>

<u> As per US GAAP, if the carrying value of an asset exceeds the sum of undiscounted expected cash flows of an asset, the asset is impaired</u>

<u />

<u>3)Explain the meaning of a non cash impairment charge</u>

<u>A non-cash charge is a accounting expense that does not involve a cash payment.  </u>

<u>(</u><u>Depreciation, amortization, depletion, stock-based compensation, and asset impairments are common non-cash charges that reduce earnings but not cash flows)</u>

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