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What is the formula for testing goodwill impairment under U.S. GAAP?

Under U.S. GAAP for assessing whether goodwill is impaired, the test is performed on the reporting unit level. The company would compare the fair-market-value of the reporting unit to the net-book-value of the reporting unit.

If FMV exceeds the NBV, then there is no impairment. However, if FMV is less than the NBV, then goodwill is impaired.


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