Issues continue to arise in connection with goodwill impairment testing. A new AICPA guide provides guidance and illustrations related to goodwill impairment testing.
In November 2013, the AICPA's Financial Reporting Executive Committee (FinREC) issued the AICPA Accounting and Valuation Guide Testing Goodwill for Impairment (the Guide). The Guide, which was developed by the AICPA Impairment Task Force, provides nonauthoritative accounting and valuation guidance and illustrations for preparers of financial statements, auditors, and valuation specialists regarding goodwill impairment testing.
The Guide consists of four chapters as well as appendices and a glossary. Chapter 1 focuses on fair value measurements and discusses the assumptions and techniques used to value a reporting unit when testing goodwill for impairment. Chapter 2 addresses accounting considerations when testing goodwill for impairment. Chapter 3 discusses and illustrates the optional qualitative assessment in determining whether or not the first step of the goodwill impairment test should be performed. Chapter 4 describes how to measure the fair value of a reporting unit and includes a comprehensive example of the two step goodwill impairment test. The appendices include: disclosure example and a summary table of the responsibilities of management and the external valuation specialist.