Reducing goodwill impairment testing costs
Goodwill impairment testing may get simpler when companies adopt guidelines recently issued by the Financial Accounting Standards Board (FASB). Using a qualitative approach outlined by the new standard may reduce preparer costs by streamlining the annual goodwill impairment testing process.
The revised standard modifies the two-step goodwill impairment test by introducing a screening process, or "Step 0". Using this approach, companies can assess "qualitatively" whether it is more likely than not that a reporting unit's carrying amount is greater than its fair value. If the answer is "no," then no further testing would be required.
How PwC can help
PwC has developed comprehensive guidance for adopting the new goodwill impairment testing standards. Click here to download our Qualitative goodwill impairment assessment sample documentation. This illustrative example can help
you in developing your company’s approach to documenting Step 0.