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LEARNING RESOURCES
FINANCIAL REPORTING

Testing Goodwill for Impairment — Accounting
and Valuation Guide Many companies
This guide provides practical guidance and
illustrations related to the qualitative assessment
and the quantitative goodwill impairment test are still struggling
(previously referred to as the first step of the two-
step goodwill impairment test).
and may be faced
PUBLICATION
with goodwill

Intangible Assets, Goodwill, and Asset impairment triggers.
Impairment and Disposal Issues
This course illustrates the application of a goodwill
impairment test before and after application of
guidance from ASU No. 2017-04, Intangibles —
Goodwill and Other (Topic 350): Simplifying the Test
for Goodwill Impairment. This course also includes
a real-life disclosure that reflects the application of
ASU 2017-04. “A lot of our private company clients electing
ASU 2021-03’s alternative are also electing the
CPE SELF-STUDY
goodwill amortization alternative, which lets them
[Data for chart, numbers are in millions] test goodwill on an entitywide basis rather than
at the reporting unit level,” Dyer said. “This also
Experienced Staff/New in-Charge — Auditing
Intangible Assets and Goodwill makes impairment less likely because you are not
limited to looking at the fair value of each reporting
A review of accounting for intangible assets and unit that has goodwill but are considering the fair
the history of accounting for goodwill, this CPE
course addresses the common risks, internal value of the entity as a whole.”
controls, and auditing procedures for intangible
assets and goodwill. EXPECTATIONS FOR THE FUTURE
Many companies are still struggling and may be
CPE SELF-STUDY
faced with goodwill impairment triggers. “Some are
getting hit hard by supply chain shortages, which
can negatively impact their sales or ability to obtain
For more information or to make a purchase, go to aicpa.org/cpe-learning financing, while others are raising their prices to
or call the Institute at 888-777-7077.
pass on the higher costs,” Cheng said.
“Although there was a big dip in markets in
March 2020, 2020 and 2021 were great years for
many companies from a fair value perspective,
and there are many companies that are worth
more now,” Cheng said. “I think of the market
banner year in 2020 because of changes in demand, like a body of water with boats, and some com-
price increases, or government assistance.” panies are mega yachts and others are canoes. As
the tide rises, most everybody rises.”
GOODWILL AMORTIZATION ELECTION “As private companies are now in their 2021
The alternative in ASU 2021-03 can be elected year-end reporting season, my sense is that 2021
in addition to the accounting alternative for was not as economically disruptive for our clients as
amortizing goodwill under FASB ASC Subtopic 2020 was,” Dyer said. “This standard can be useful
350-20. “Companies amortizing goodwill over 10 any time there is economic disruption, especially if
years or less have a lower net book value, so there it happens earlier in a reporting period and there is
is a significantly diminished risk of impairment time for recovery. Companies can make an election
resulting from the carrying value of the entity to initially adopt it in 2022 for 2021 reporting
(or reporting unit) exceeding its fair value,” without any preferability assessment, and there is
Cheng said. very little downside to electing it.” ■

28 | Journal of Accountancy June 2022