Using qualitative impairment testing for FCC licenses

December 2012
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Using qualitative impairment testing for FCC licenses

At a glance

Accounting Standards Update 2012-02 would enable broadcasters to streamline goodwill impairment testing on FCC licenses maintained as indefinite-lived assets. This PwC whitepaper discusses variables for a qualitative analysis, sometimes referred to as “Step 0,” may be feasible for FCC licenses.

Accounting Standards Update 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”), allows companies to apply a qualitative impairment test to indefinite-lived intangibles before proceeding to a quantitative analysis (sometimes referred to as “Step 0”). As many broadcasters maintain FCC licenses as indefinite-lived assets, ASU 2012-02 presents an opportunity to reduce the resources used on quantitative impairment tests. This PwC whitepaper reviews key issues broadcasters should evaluate when considering Step 0 tests for FCC licenses, including:

  • Broadcast industry and market conditions
  • Legal or regulatory factors
  • Recent impairments or plans to dispose of an FCC license
  • Complexities using the "Greenfield Method" to estimate fair value