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Constituents to the accounting profession recommend that educators teach critical thinking skills, thus improving accounting graduates’ abilities to achieve long-term career success. Students in upper division accounting courses possess the basic understanding of accounting principles and are provided new content requiring analysis and evaluation, which makes these courses a good setting for motivating students to develop critical thinking skills. This paper discusses an exercise for upper division accounting courses that provide students the opportunity to examine the challenging concept of goodwill impairment for a parent company with three separate subsidiaries. The suggested exercise requires students to research, properly cite, and apply the impairment standards under both U.S. GAAP and IFRS, to analyze the differences between the two standards, to write a business letter summarizing the findings, and to consider the ethical issues involved in earnings management.

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Accounting Commons