The SEC staff has focused on the quality of the disclosure around significant judgments and estimates associated with goodwill and intangible assets, including impairment assessments, frequently commenting on:
  • the identification of reporting units, including factors considered when multiple components have been combined into a single reporting unit due to economic similarities;
  • at risk reporting units, including information about the amount of goodwill and headroom at the reporting unit, discussion of the key assumptions used to determine the reporting unit’s fair value and their associated degrees of uncertainty, and a description of potential events or changes in circumstances that could negatively affect the key assumptions;
  • triggering events that may indicate that an interim impairment assessment is necessary; and
  • the timing of goodwill and intangible asset impairment charges.
Comment Examples
Guidance references
  • We note your change in segments resulted in a change in the allocation of goodwill to your reporting units. Please tell us whether you performed an interim goodwill impairment test related to the existing reporting units before the change. If not, explain why not. Refer to ASC 350-20-35-45 and ASC 350-20-35-3Cf.
  • Please disclose changes (if any) to the composition of one or more of your reporting units in connection with your segment reorganization and your basis for reassignment of goodwill to each reporting unit. Refer to ASC 350-20-35-45 and 46.
  • We note that your market capitalization decreased in the third quarter with the decline of your stock price from June to September. In addition, we note larger losses in the third quarter than in the second quarter as well as increased negative cash flows. Please explain your consideration of these facts and why these did not result in additional impairment testing as of the third quarter.
  • In future filings, please disclose the amount of goodwill allocated to each of your reportable segments and any significant changes in the allocation of goodwill by reportable segment for all periods presented in accordance with ASC 350-20-50-1.

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