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AICPA Issues Working Draft of Accounting and Valuation Guide on Testing Goodwill for Impairment

Published on: 07 Nov 2011

Last Thursday, the AICPA’s Financial Reporting Executive Committee released for public comment a working draft of its Accounting and Valuation Guide Testing Goodwill for Impairment. The guide provides nonauthoritative accounting and valuation guidance and illustrations to assist in goodwill impairment testing, including:

  • Guidance on the first step of the two-step goodwill impairment test (e.g., identifying reporting units and assigning assets and liabilities to a reporting unit).
  • Guidance on measuring the fair value of a reporting unit in accordance with ASC 820, Fair Value Measurement.
  • A discussion about the FASB’s recently issued ASU 2011-08, Testing Goodwill for Impairment (however, the guide does not include significant commentary or examples of the ASU’s qualitative assessment framework).
  • Illustrations of the valuation techniques often used in the first step of the two-step test.
  • Illustrations of the second step of the goodwill impairment test.

Comments on the working draft are due March 15, 2012.

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