D252
Accounting Research & Critical Thinking
TASK 2
Goodwill Impairment Analysis
Passed on the First Attempt.
Western Governors University
, Task 2 Goodwill Impairment Analysis – AMMRC Inc.
WGU D252
Brittany Pery
06/24/2025
The Financial Accounting Standards Board (FASB) provides an outline and guidance for
goodwill impairment in the ASC 350- Intangible- Goodwill and others. The section referenced
summarizes the treatment of goodwill impairment given various organizational scenarios. Each
summary below is supported by its appropriate codification reference (FASB, 2023)
A1. Treatment When a Company Has Similar Characteristics
Goodwill impairment treatment for when a company has similar economic characteristics is
outlined in ASC 350-20-35-33 through 35-35. An entity may assess them as a single reporting
unit for impairment testing. Doing so simplifies the process and may defer impairment
recognition if the combined unit exceeds fair value.
A2. Treatment When a Company Does Not Have Similar Economic Characteristics
Goodwill impairment treatment for when a company does not have similar economic
characteristics is outlined in ASC 350-20-35-31 to 35-32. In this case, each unit must be tested
separately for goodwill impairment. This approach helps to ensure that any declines in value are
accurately captured for each section of the business.
A3. Treatment for a Public Company
Goodwill impairment for a public company is outlined in ASC 350-20-35-3C (for the optional
one-step test) and ASC 350-20-35-1 through 35-19 (for the legacy two-step test). Public
companies must follow either a one-step or two-step test, depending on the effect of the
accounting standards. Step one is to compare the fair value of a reporting unit to its carrying
amount. If the fair value is less than the carrying amount, goodwill is considered impaired. Step
two measures the impairment loss as the difference between the carrying value of goodwill and
its implied fair value.
A4. Treatment for a Private Company
Goodwill impairment treatment for a private company is outlined in ASC 350-20-35-62 through
35, 68, and ASC 350-20-65-2. Private companies can apply the same approach as public
companies or elect the accounting alternative that simplifies accounting in one of two ways:
testing for impairment when triggering events occur, or amortizing goodwill over 10 years (or a
shorter period).
This study source was downloaded by 475100 from cliffsnotes.com on 11-13-2025 18:58:53 GMT -06:00
https://www.cliffsnotes.com//study-notes/27894356
Accounting Research & Critical Thinking
TASK 2
Goodwill Impairment Analysis
Passed on the First Attempt.
Western Governors University
, Task 2 Goodwill Impairment Analysis – AMMRC Inc.
WGU D252
Brittany Pery
06/24/2025
The Financial Accounting Standards Board (FASB) provides an outline and guidance for
goodwill impairment in the ASC 350- Intangible- Goodwill and others. The section referenced
summarizes the treatment of goodwill impairment given various organizational scenarios. Each
summary below is supported by its appropriate codification reference (FASB, 2023)
A1. Treatment When a Company Has Similar Characteristics
Goodwill impairment treatment for when a company has similar economic characteristics is
outlined in ASC 350-20-35-33 through 35-35. An entity may assess them as a single reporting
unit for impairment testing. Doing so simplifies the process and may defer impairment
recognition if the combined unit exceeds fair value.
A2. Treatment When a Company Does Not Have Similar Economic Characteristics
Goodwill impairment treatment for when a company does not have similar economic
characteristics is outlined in ASC 350-20-35-31 to 35-32. In this case, each unit must be tested
separately for goodwill impairment. This approach helps to ensure that any declines in value are
accurately captured for each section of the business.
A3. Treatment for a Public Company
Goodwill impairment for a public company is outlined in ASC 350-20-35-3C (for the optional
one-step test) and ASC 350-20-35-1 through 35-19 (for the legacy two-step test). Public
companies must follow either a one-step or two-step test, depending on the effect of the
accounting standards. Step one is to compare the fair value of a reporting unit to its carrying
amount. If the fair value is less than the carrying amount, goodwill is considered impaired. Step
two measures the impairment loss as the difference between the carrying value of goodwill and
its implied fair value.
A4. Treatment for a Private Company
Goodwill impairment treatment for a private company is outlined in ASC 350-20-35-62 through
35, 68, and ASC 350-20-65-2. Private companies can apply the same approach as public
companies or elect the accounting alternative that simplifies accounting in one of two ways:
testing for impairment when triggering events occur, or amortizing goodwill over 10 years (or a
shorter period).
This study source was downloaded by 475100 from cliffsnotes.com on 11-13-2025 18:58:53 GMT -06:00
https://www.cliffsnotes.com//study-notes/27894356
