FAR Goodwill · Updated November 2026
Goodwill Impairment: Why Is the Reporting Unit So Important?
Goodwill belongs to a reporting unit rather than standing alone.
Reporting unit
Goodwill is assigned to reporting units benefiting from acquisition synergies.
Impairment test
The reporting unit's carrying amount is compared with fair value under the applicable model.
Loss limit
Any impairment loss is limited so goodwill is not reduced below zero.
Exam strategy
Identify the reporting unit before testing goodwill.
The takeaway
Goodwill impairment is tested at the reporting-unit level.
Related Summit resources
FAQ
Is goodwill generally tested alone?
No.
What unit is central?
The reporting unit.
Can goodwill be written below zero?
No.