Impairments

Overview: ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets provides guidance on estimating cash flows when performing a recoverability test for long-lived assets to be disposed of other than by sale (e.g. abandoned) or classified as “held and used” until disposed of, and establishes more restrictive criteria to classify an asset (group) as “held for sale.” ASC 360 also addresses the accounting and reporting provisions for the disposal of a segment of a business and would extend the reporting of a discontinued operation to a “component of an entity” increasing the likelihood that a disposition will represent a discontinued operation. Further, ASC 360 requires operating losses from a “component of an entity” to be recognized in the period(s) in which they occur (rather than as of the measurement date).

Under ASC 350 Intangibles - Goodwill and Other, goodwill and indefinite-lived intangible assets are no longer amortized but are reviewed annually (or more frequently if impairment indicators arise) for impairment. Goodwill is required to be tested for impairment between the annual tests if an event occurs or circumstances change that more-likely-than-not reduces the fair value of a reporting unit below its carrying value. An indefinite-lived intangible asset is required to be tested for impairment between the annual tests if an event occurs or circumstances change indicating that the asset might be impaired. Separable intangible assets that have finite lives will continue to be amortized over their useful lives, for which ASC 350 does not impose a limit.

Services: The underlying services that we provide for impairment analysis generally relate to financial projections and intangible asset valuations. We apply the Standards of the AICPA in developing prospective financial information and Statements on Standards for Valuation Services, published by the AICPA, in developing calculations of intangible fair value. We have extensive experience identifying and valuing intangible assets. Our services and our deliverables are designed to withstand the scrutiny of your audit firm.