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Excerpt from ASC Master Glossary
Entities that adopt the goodwill alternative guidance |
All other entities |
|
Amortization
|
Requires goodwill to be amortized on a straight-line basis over a period of ten years, or less in certain circumstances
|
Does not allow goodwill to be amortized
|
Level of testing
for impairment assessment |
Either entity-wide or reporting unit (policy election upon adoption of the accounting alternative)
|
Reporting unit
|
Frequency of
impairment assessment |
Upon occurrence of a triggering event
|
At least annually, and between annual tests whenever a triggering event occurs
|
Measurement
of impairment |
Single step test, which compares the fair value of the entity (or reporting unit) to its carrying amount
|
Two-step test prior to the adoption of ASU 2017-04: In the first step, the fair value of each reporting unit is compared to its carrying amount. If the fair value of the reporting unit is less than its carrying amount, a second step is used to measure any impairment. This second step requires the preparation of a hypothetical purchase price allocation to determine the implied fair value of goodwill. The impairment, if any, is the amount by which the carrying amount of the reporting unit’s goodwill exceeds its implied fair value
|
Allocation of
impairment |
Impairment charge allocated to separate amortizable units of goodwill using either a pro rata allocation based on relative carrying amounts of goodwill or another reasonable and rational basis
|
Impairment charge allocated at the reporting unit level
|
Disposal of
business that constitutes a portion of an entity (or reporting unit) |
Goodwill attributed to disposed business using a reasonable and rational approach
|
Goodwill attributed based on the relative fair value of the business disposed of to the portion of the reporting unit being retained
|
Goodwill origin |
Goodwill carrying amount before impairment loss |
Remaining useful life at impairment test date |
|
Unit 1 |
Existing goodwill on adoption date |
$300 |
5 years |
Unit 2 |
20x1 acquisition |
$150 |
8 years |
Unit 3 |
20x2 acquisition |
$50 |
9 years |
Total |
$500 |
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