If both an asset group and goodwill in one of a company's reporting units have to be tested for impairment, which of the following statements is correct regarding impairment testing and impairment losses? A. The other asset group should be tested for an impairment loss before goodwill is tested. B. Impairment testing may be conducted concurrently for the other asset group and goodwill. C. If the other asset group is impaired, the loss should not be recognized prior to goodwill beingtested for impairment. D. If goodwill is impaired, the loss should be recognized prior to testing the other assets for impairment.

Question

Jordon Villa

Business

4 April, 11:30

If both an asset group and goodwill in one of a company's reporting units have to be tested for impairment, which of the following statements is correct regarding impairment testing and impairment losses? A. The other asset group should be tested for an impairment loss before goodwill is tested. B. Impairment testing may be conducted concurrently for the other asset group and goodwill. C. If the other asset group is impaired, the loss should not be recognized prior to goodwill beingtested for impairment. D. If goodwill is impaired, the loss should be recognized prior to testing the other assets for impairment.

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Answers (1)

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Aryana Casey · Answer 1

Answer: A. The other asset group should be tested for an impairment loss before goodwill is tested.

Explanation:

According to the IFRS standards, it is important and necessary to revalue your assets according to their net realizable value, i. e, assets should be reported after deducting accumulated depreciation or amortization in the case of goodwill. In the case of inventory, NRV should be calculated by estimating impairments.

The other asset groups are tested to check for impairment loss and later the goodwill is tested.