Using qualitative impairment testing 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