Goodwill is typically evaluated to impairment loss at least once a year. Why is this? An...

Goodwill is typically evaluated to impairment loss at least once a year. Why is this? An example would be greatly appreciated!

I'm currently taking Intermediate Accounting 2.

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Goodwill is typically evaluated to impairment loss at least once a year because According to the GAAP, companies are obligated to evaluate Goodwill once a year to know the impairment loss i.e the reduction in the carrying value of the assets as yearly the carrying value of assets gets diminished and it's productivity gets reducing as compared to the prior year. So, the Goodwill is evaluated to impairment loss at least once a year to know the impairment loss in the assets, to know the current cash flow whether it is reduced ,increased or constant. Impairment loss reduces the cash flows ,therefore Goodwill is evaluated so that the management team can focus on the overall financial and issues related to the growth and development of the company ,Because of it, company are able to improve there financial statements and it provides the company or firm to plan a series of further plans or tasks,to eliminate the deficiencies of business operations in order to stay in long run in its industry.

ekkarill92 answered 1 year ago

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