[MCLKT]

I have 2011 FAR study materials and I know the Impairment testing for Goodwill changed for 2012. Can anyone explain the difference and what is important to know as far as testing and measuring impairment for Goodwill is concerned?

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[NoOrigins]

From what I remember, basically, they allow companies to do first do a qualitative assessment on whether or not impairment is likely to have occurred. They determine if it is more likely than not that the value of a reporting unit has been impaired and if so, they go through the rest of the impairment process ((the quantitative two step process).

The qualitative part involves looking at a variety of factors such as market conditions. The idea is to save companies costs in doing annual impairment tests. If it doesn't seem more likely than not impairment of the reporting unit occurred, you don't have to do the test.

Just as a cruddy example, let's say you purchased Apple and they are now a subsidiary of yours (yeah, good luck, lol). Given how strong their performance has been, it's really unlikely that the value of Apple has declined, so it would be a waste of money to evaluate them for impairment. That being said, you might also want to consider the potential impact of the FoxConn riots on them.

Anyways… https://www.deloitte.com/view/en_US/us/Services/Financial-Advisory-Services/Business-Valuation-Financial-Advisory/83b6f1084c443310VgnVCM1000001a56f00aRCRD.htm#

FAR: Passed
REG: Passed
BEC: Passed
AUD: Passed

[MCLKT]

Thank you, that is helpful 🙂

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[Author]

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