Goodwill and Intangible Asset Impairment Testing (ASC 350)

Goodwill and Intangible Asset Impairment Testing (ASC 350)

In accordance with ASC 350, goodwill and other indefinite lived intangible assets must be tested for impairment at least annually. The standard of value is fair value. Fair value must comply with the definition and standards prescribed by ASC 820. Goodwill and other intangible assets may be tested between annual test dates if there is:

  • A significant adverse change in legal factors or in the business climate
  • An adverse action or assessment by a regulator
  • Unanticipated competition
  • A loss of key personnel
  • A more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of
  • The testing for recoverability under Statement 121 of a significant asset group within a reporting unit
  • Recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit

Goodwill and indefinite lived intangible assets must be tested at the reporting unit level. The identification of a company’s reporting units can be a critical part of the ASC 350 analysis, and we work with our clients and their auditors to appropriately recognize the reporting units.