Goodwill and Asset Impairment Testing Services

Supporting the book value of your goodwill through an annual impairment test is part of the regulatory requirements under GAAP.  CVA can ensure you meet those requirements by applying our 25 years of experience and expertise to your project.

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Impairment Testing Process – ASC 350

Given the significant value which can be assigned to the intangible assets of a Company, it is necessary to periodically test the indefinite-lived intangible assets for impairment.

The process outlined in the accounting guidance is outlined below:

Step Zero – Qualitative analysis used when impairment is unlikely.

Step 1 – Comparison between the Fair Value of the reporting unit (or indefinite-lived asset) to its carrying value.

As in an ASC 805 analysis, a Market Approach and Income Approach are typically utilized in estimating the value of the reporting unit.

Indefinite-lived assets are valued using the appropriate methods and compared to carrying amount.

If the Fair Value of a reporting unit is less than the carrying amount of that reporting unit, it may be necessary to conduct a undiscounted cash flow analysis to test for impairment of long-lived assets under ASC 360.

If the sum of the undiscounted cash flow is less than the carrying amount of the reporting unit, it is necessary to move to a Step 2 analysis.

Step 2 – Revalue all of the assets of the reporting unit.

It is also necessary to test for asset impairment when a triggering event occurs.  Triggering events could include losing a material customer, discontinuing a product line, rebranding a company, replacing a technology, etc.

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Why consider using CVA to complete your required annual Goodwill Impairment Test?

Meet your fiduciary responsibility.

CVA is a qualified provider with 25+ years of experience, the proper credentials and the expertise to complete the process in the manner prescribed by regulators and accepted by auditors.

Reduce your risk by ensuring you have a qualified team performing the test.

Increasing scrutiny from regulators focuses on having the right process, information, documentation and expertise engaged to complete the test properly.  This has led many of our clients to decide on outsourcing this to a specialist like CVA to reduce their risks.

Auditor support is provided as needed.

We provide defensible conclusions and work closely with your auditors to answer their questions so they can approve the results.

We have access to the necessary data and resources.

Does your team have access to current information and resources at your disposal required to gather the data to formulate your valuation multiples or substantiate your value conclusions?

Your team may simply be too busy with other year end work and may not have the extra time required to complete the process in a complete and thorough manner.

We are easy to work with and we can take this item off of your “to do” list so you can focus on your other important tasks and projects.

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