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3 . Briefly outline the process for determining if goodwill is impaired and how to allocate any impairment loss. Companies must evaluate the fair value
Briefly outline the process for determining if goodwill is impaired and how to allocate any impairment loss.
Companies must evaluate the fair value of the reporting unit to its carrying amount, which includes goodwill, to determine whether it is impaired. Goodwill is degraded when the fair value falls below the carrying amount. Companies distribute impairment losses by first reducing the carrying amount of any goodwill in the reporting unit and then allocating the remaining loss on a prorata basis to the other assets in the reporting unit.
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