Impairment Testing of Goodwill & Intangibles

An ASC 350 valuation requires goodwill and other indefinite lived intangible assets to be tested at least annually. However, if “trigger events”, material changes, or other circumstances identified by management occur, testing may be required more often.

Testing can be required more often if material events (or “trigger events”) occur; such as: change in business/legal situation, loss of key people, business or asset sale/disposition, other impacts to inputs around assumptions of the value of the indefinite lived intangible assets.

When fulfilling the ASC 350 valuation requirement, a two-step approach for testing can be taken: companies can elect a qualitative test (“Step 0”) or a quantitative impairment test (“Step 1 & Step 2”). The impairment testing must happen at the reporting unit level.

In fulfilling the ASC 350 valuation requirements, your company needs to choose an advisory firm who understands the business and can work with your company’s auditors to ensure seamless testing and reporting for ASC 350 valuation requirements.