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Qualitative Goodwill Impairment Assessment — A Roadmap to Applying the Guidance in ASU 2011-08

Published on: May 16, 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.


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