Question

Part A –respond to the following questions and support the “yes” or “no” answer you give with appropriate citations from the FASB Codification or IAS reference.

1. Is impairment of goodwill reversible under United States Generally Accepted Accounting Principles (“GAAP”)
2. Is impairment of goodwill reversible under International Financial Reporting Standards (“IFRS”)?

Part B – Compare and contrast the requisite goodwill impairment testing procedures under IFRS vis-à-vis U.S. GAAP?  

Answer 1

Solution:-

1. Is impairment of goodwill reversible under United States Generally Accepted Accounting Principles (“GAAP”):-

No

Explanation:-

Testing goodwill for impairment requires two steps under U.S. Generally Accepted Accounting Principles (GAAP). Once the book value of goodwill has been written down to its fair value, GAAP prohibits you from reversing impairment losses, even if the value eventually recovers.

2. Is impairment of goodwill reversible under International Financial Reporting Standards (“IFRS”)?

No

Explanation:-

Impairment losses recognized on goodwill are not permitted to be reversed under IFRS.

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