<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>
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<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>
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<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>
