FASB ASC 350 , FASB ASC 360 , IFRS 3 and IAS 36 require that goodwill, intangible assets and other long-lived assets be tested for impairment with FASB ASC 350 requiring testing at least annually and FASB ASC 360 requiring testing upon a triggering event such as the loss of a major customer or contract.
Goodwill impairment testing is required to be performed at a reporting unit level, which may be one or more levels below a segment reporting level and is usually determined at the time of a business combination valuation. Goodwill testing can be a two-step process. The fair value of goodwill is initially tested by determining the fair value of the net equity of an entity using business enterprise valuation methodology. If the result is that the book net equity is impaired, then the recorded and unrecorded tangible and intangible assets are revalued using business combination valuation guidelines resulting in a reduction of recorded goodwill.
Murray Devine’s extensive industry and financial reporting experience allows us to implement such testing procedures with the highest degree of efficiency and reliability.
