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Section 3310: Goodwill
[U.S. GAAP Codification Topic]
350 Intangibles - goodwill and other
350-10 Overall
350-20 Goodwill
[U.S. GAAP before the Codification]
AICPA SOP 98-1, 1998, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use
1. Goodwill
--> not amortized [asc 350-20-35-1]
--> tested for impairment at the level of a reporting unit
2. Impairment Loss
--> two step approach
step 1: impairment test for a reporting unit
step 2: impairment test for goodwill
3. Step 1
--> is (a) < (b)?
(a) fair value of a reporting unit
(b) carrying amount of a reporting unit
--> if yes, go to step 2
4. Step 2
--> is (c) < (d)?
(c) implied fair value of goodwill of the reporting unit
(d) carrying amount of goodwill of the reporting unit
--> if yes, impairment loss is recognized
5. "Reversal" of impairment loss is not allowed. [asc 350-20-35-13]
6. Goodwill Impairment Test, IFRS: IAS 36, Impairment of Assets
(1) Goodwill impairment test [IAS 36-pr 80-108]
(2) Goodwill is allocated to Cash Generating Unit (CGU)
(3) Impairment test for CGU: Is recoverable amount < carrying amount?
(4) Impairment loss of CGU
--> allocated to reduce the carrying amount of goodwill, first
--> then, allocated to other assets
7. Goodwill Impairment Test, U.S. GAAP, asc 350-20
(1) Impairment test for "reporting unit"
--> Is fair value of reporting unit < carrying amount?
(2) If yes, impairment test for "goodwill"
--> Is implied fair value of goodwill < carrying amount?
(3) If yes, impairment loss for goodwill is recognized.
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