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Dokumentvorschau
IRZ 12, Dezember 2011, Seite 509

Highlighting Accounting Standards Update (ASU) 2011–08 on Topic 350 –Testing Goodwill for Impairment

Striking a New Path to Cost Efficiency

Kyle Orwick und Christoph Eppinger

FASB Topic 350, Intangibles – Goodwill and Others was issued in June of 2011. Until now entities should have been testing goodwill at least on an annual basis for impairment in a two-step calculation. Through ASU 2011–08 the FASB provides an optional approach for reporting units when making their required consideration of impairment of goodwill. This article outlines the principal modification as well as some issues encountered in practice.

1. Background of FASB Topic 350, Intangibles – Goodwill and Others

FASB Topic 350, Intangibles – Goodwill and Others (formerly FAS 142) mandates, among other requirements, entities to test goodwill at least on an annual basis for impairment. Prior to the update, the test was a two-step process where the reporting unit must first calculate the fair value and compare it with the carrying value including goodwill. In the event that the fair value is less than the carrying value, the reporting unit must calculate the implied fair value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, the difference should be recognized as an impairment loss in the current year (ASC 350-20-35), see example below. In contr...

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