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 an ASC 360 analysis to revalue the long-lived assets.

If impairment is likely, this analysis could result in the write-down in the book value of goodwill or other assets with an impaired value.

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.

Meet your fiduciary responsibility.

CVA is a qualified provider with 30+ 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.