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ASC 350 - FAS 142 ‘Intangibles - Goodwill & Other’ | Valuation & Advisory Services

Goodwill Impairment Testing

Goodwill impairment analysis, pursuant to ASC 350 (formerly, FAS 142) often involves deep understanding of intangibles, in addition to business valuation. And valuation of intangibles requires significant multiple-disciplinary knowledge and extensive domain experience. Having performed hundreds of business combination assignments across diverse industry sectors, Aranca’s valuation experts understand the complexities involved in valuing intangible assets and goodwill.

How does ASC 350 impact you?

ASC 350 requires a detailed determination of the fair value of a reporting unit performed annually, provided there is no indication of adverse change in the value and it falls below the carrying value for a reporting unit. However, due to change in the circumstances, if the fair value of a reporting unit falls below its carrying amount, the Goodwill shall be required to be tested for impairment between the annual tests.

The impairment analysis is performed in two steps.

  • Under the first step the fair value of the reporting unit, in whose books the goodwill exists, is determined and compared to its carrying value. If this fair value is lower than the carrying value then under the second step, impairment is calculated
  • Second Step : Fair value is allocated among all assets (tangible as well as intangible) and liabilities of the reporting unit as if the reporting unit is acquired under a Business Combination (Purchase Price Allocation pursuant to ASC 805 | FAS 141R)

How can Aranca help?

Our complementary practice areas / capabilities in intellectual property (IP) research coupled with our strong credentials in business valuations uniquely position us to provide high quality advisory services for intangibles valuation. Our comprehensive appraisal reports go beyond mere documentation and bring analytical insights. We have extensive experience of handling audit reviews, including by the big four, so that our clients do not face any audit delays and issues, and comply with growing financial reporting responsibilities with confidence.