Finding the good in goodwill impairment testing
Abstract: Under current accounting standards, companies that record goodwill on their balance sheets are required to test it annually for impairment. Optional, qualitative impairment assessments can help some companies reduce the cost and complexity of impairment testing. But they also introduce new uncertainties and risks into the impairment testing process. As this article explains, it’s important to develop a plan for determining whether qualitative assessments are appropriate and, if so, for making and documenting those assessments. A sidebar describes the two-step process involved in goodwill impairment testing.