D252
Accounting Research & Critical Thinking
TASK 2
Goodwill Impairment Analysis
Passed on the First Attempt.
Western Governors University
, D252 Task 2
A
Goodwill is considered any amount over the fair value of the assets (FASB, ASC 350-20-
25). When a company has similar economic characteristics across its reporting units, ASC 350-
20-35-35 to 35-36 states that these units can be aggregated into a single unit for reporting. This
should only be done if all components are similar. If the company has diverse economic
characteristics, it should be reported as a separate unit. ASC 280-10-50-11 gives criteria for
testing similarity characteristics that includes nature of products, services, production processes,
and distribution methods. Testing for impairment, whether in groups or as a single unit, has a
similar two-step process: a qualitative assessment to determine whether it is more likely than not
that the fair value of the reporting unit is less than its carrying amount, and if necessary, a
quantitative assessment to compare the fair value of the reporting unit with its carrying amount
and recognize an impairment loss if the fair value is less.
Public and private companies can have different rules regarding testing for goodwill
impairment. Public companies must test goodwill for impairment at least annually and more
frequently if triggering events occur. Private companies have the option to adopt the accounting
alternative under ASC 350-20-35-65 to 35-67, which simplifies the goodwill impairment
process, or they can choose to test like a public company. Public companies cannot amortize
goodwill in ASC 350-20-05-4A, but instead must test for impairment according to the
requirements listed in ASC 350-20-35-28 through 35-32. This involves the 2-step testing
process mentioned above. If there is an impairment, they must write down the reported value of
goodwill impaired. Private companies are only required to test for impairment when a triggering
event occurs.
This study source was downloaded by 100000902171055 from CourseHero.com on 11-10-2025 17:50:19 GMT -06:00
https://www.coursehero.com/file/236942760/D252-task-2docx/
Accounting Research & Critical Thinking
TASK 2
Goodwill Impairment Analysis
Passed on the First Attempt.
Western Governors University
, D252 Task 2
A
Goodwill is considered any amount over the fair value of the assets (FASB, ASC 350-20-
25). When a company has similar economic characteristics across its reporting units, ASC 350-
20-35-35 to 35-36 states that these units can be aggregated into a single unit for reporting. This
should only be done if all components are similar. If the company has diverse economic
characteristics, it should be reported as a separate unit. ASC 280-10-50-11 gives criteria for
testing similarity characteristics that includes nature of products, services, production processes,
and distribution methods. Testing for impairment, whether in groups or as a single unit, has a
similar two-step process: a qualitative assessment to determine whether it is more likely than not
that the fair value of the reporting unit is less than its carrying amount, and if necessary, a
quantitative assessment to compare the fair value of the reporting unit with its carrying amount
and recognize an impairment loss if the fair value is less.
Public and private companies can have different rules regarding testing for goodwill
impairment. Public companies must test goodwill for impairment at least annually and more
frequently if triggering events occur. Private companies have the option to adopt the accounting
alternative under ASC 350-20-35-65 to 35-67, which simplifies the goodwill impairment
process, or they can choose to test like a public company. Public companies cannot amortize
goodwill in ASC 350-20-05-4A, but instead must test for impairment according to the
requirements listed in ASC 350-20-35-28 through 35-32. This involves the 2-step testing
process mentioned above. If there is an impairment, they must write down the reported value of
goodwill impaired. Private companies are only required to test for impairment when a triggering
event occurs.
This study source was downloaded by 100000902171055 from CourseHero.com on 11-10-2025 17:50:19 GMT -06:00
https://www.coursehero.com/file/236942760/D252-task-2docx/
