Qualitative Goodwill Impairment Assessment — A Roadmap to Applying the Guidance in ASU 2011-08
Published on:
16 May 2012
This publication addresses considerations related to adopting and performing a qualitative assessment of goodwill impairment in accordance with FASB ASU 2011-08, Testing Goodwill for Impairment. Key topics discussed include:
- Establishing and documenting the facts that are relevant to reporting units and goodwill balances.
- Updating processes and related internal controls in response to the guidance in ASU 2011-08.
- Identifying reporting units that bypass step 0 and proceed to step 1 of the traditional two-step impairment analysis.
- Evaluating events and circumstances to support an assertion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount.
- Documenting the conclusions reached in the qualitative assessment.
The publication is divided into four main sections:
- Introduction — An overview of key considerations related to the qualitative assessment of goodwill impairment introduced by ASU 2011-08.
- Adoption Considerations — A summary of questions to consider when adopting ASU 2011-08.
- Documentation and Process Considerations— A comprehensive description of five steps that entities may consider when adopting ASU 2011-08 and performing the new assessment.
- Step A: Compile and document relevant historical information about the entity and its reporting units.
- Step B: Consider updating processes and internal controls upon adopting ASU 2011-08.
- Step C: Identify reporting units for which an entity may proceed to Step 1 of the traditional two-step impairment analysis.
- Step D: Assess events and circumstances to determine whether it is MLTN that the fair value of the reporting unit selected for the qualitative assessment is less than the carrying amount.
- Step E: Determine and document the results of the qualitative assessment performed to test goodwill for impairment.
- Interim Assessment — A description of considerations related to performing a qualitative goodwill impairment assessment at times other than the annual measurement date.
The Roadmap is available on the Deloitte Accounting Research Tool Web site.