Question

With respect to identifiable intangible assets other than goodwill, which of the following is true?

Multiple Choice

If the value of the identified asset meets a de minimis exception, the entity may elect to treat it as goodwill.

An identifiable intangible asset with an indefinite useful life must be assessed for impairment once every three years.

If the average fair value of the asset is less than the average carrying amount of the asset with respect to, and determined for, the preceding three-year period, the asset is considered impaired and the entity may recognize a loss.

A quantitative evaluation of value is required each year regardless of circumstances.

If a qualitative assessment of the asset performed by an entity indicates impairment is likely, a quantitative assessment must be performed to determine whether there has been a loss in fair value.

Answer 1

Solution: If a qualitative assessment of the asset performed by an entity indicates impairment is likely, a quantitative assessment must be performed to determine whether there has been a loss in fair value

Explanation: When testing goodwill for impairment, an entity can perform in two-steps (1) qualitative assessment determines the reporting unit's fair value is more likely than not less than the carrying amount or (2) choosing not to perform the qualitative assessment.