This course covers the impairment of fixed assets (ASC 360) and impairment of intangible assets (ASC 350). Impairment evaluation sequencing: 1) Other assets, including: Receivables and inventory under the applicable guidance ; Indefinite-lived intangibles under ASC 350-30. Under ASC 350, companies must perform an annual test to determine if the goodwill of any of its reporting units is impaired. Accounting Standards Codification 350 ( ASC 350) defines the testing for goodwill impairment. In general, goodwill shall not be amortized but rather shall be tested at least annually for impairment at the reporting unit level. In the impairment test, which should be performed at least annually and potentially in interim periods if there is a triggering event, the fair value of the reporting unit is compared with the carrying amount. With the increase in number of intangible assets being acquired through business combinations, the need for better financial information has increased. 3. 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. Under this change, goodwill and other intangible assets are now subject to an annual test for impairment of value. asc 350-20 1. No – There's no indication of impairment so your work is done Yes – Proceed to step one of the quantitative assessment [asc 350-20-35-13] [IFRS] IAS 36: Impairment of Assets Goodwill impairment test [IAS 36-pr 80-108] 1. Testing for Impairment. If yes, impairment loss for goodwill is recognized. In part I, we outlined the order of impairment testing for assets held and used. If yes, impairment test for “goodwill” –> Is implied fair value of goodwill < carrying amount? Since goodwill is not amortized, ASC 350 requires it be measured for impairment annually based on reporting units using a two-step test. Welcome to EY.com. Goodwill and Intangible Asset Impairment Testing (ASC Topic 350) Under ASC Subtopic 350-20-35-1, goodwill and certain intangibles are not amortized; rather, these assets must be periodically tested for impairment under Accounting Standards Codification No. Under the current guidance in ASC 350,3 impairment of goodwill “is the condition that exists when the carrying amount of goodwill exceeds its implied fair value.” The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. The annual goodwill impairment test may be performed any time during the ﬁ scal year provided the test is performed at the same time Determine the fair value of the indefinite-lived asset at the measurement date. --> if yes, impairment loss is recognized "Reversal" of impairment loss is not allowed. Then, next up are long-lived assets (fixed assets) and intangibles subject to amortization, excluding goodwill (under ASC 360). For more information, see the “Order of Impairment … Currently, ASC 350-20-35 provides for quantifying goodwill impairment under a two-step model. Under ASC Topic 350, companies must test their goodwill for impairment at three different points in … Goodwill Impairment. KPMG reports on FASB’s ASU 2017-04 related to ASC 350. Application of testing is as follows: 1. Goodwill is allocated to Cash Generating Unit (CGU) 2. Goodwill Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350-20 provides guidance on accounting and reporting for … 2. 350, Intangible-Goodwill and Other (ASC 350). Traditionally, testing for goodwill impairment was a two-step process. Goodwill is an intangible asset that can be measured and belongs to the company. 3. The major financial reporting change due to ASC 350 (formerly FASB 142) is the elimination of the amortization of goodwill. Material changes in the economic outlook or in a company’s ongoing business outlook may require an impairment of goodwill. An entity first identifies the potential for goodwill impairment under step one (Step I) and then quantifies the amount of impairment under Step II. The first step of the goodwill impairment test, used to identify potential impairment, compares the appraised fair value of the invested capital of a reporting unit with the carrying (book) value of its invested capital amount, including goodwill. FASB ASU eliminates Step 2 of the goodwill impairment test and replaces the qualitative assessment. Here are some examples of goodwill triggering events, according to ASC 350-20-35: Impairment loss of CGU ASC 350 outlines two ways to quantitatively test for goodwill impairment. FASB 142 required businesses to perform a Transitional Impairment Test on all goodwill within six months. In particular, the relevant guidance is included in the “Impairment or Disposal of Long-Lived Asset” subsections of ASC … Impairment: Goodwill (1.0 CPE) This course will explore the goodwill impairment test, including considerations for each step of the test, upcoming changes, and required disclosures. © Private entities electing the accounting alternative are only required to test upon a triggering event. arrangement may be capitalized under the guidance in ASC 350-40. Or in a company ’ s ASU 2017-04 related to ASC 350 requires be. 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