ASC 350, 360 (formerly SFAS 144)
The incorporation of fair value metrics into financial reporting has created a number of new reporting considerations for business entities. Accounting Standards Codification 350 (formerly SFAS 142) and Accounting Standards Codification 360 (formerly SFAS 144) provide guidance to test the impairment of both tangible and intangible assets.
What is ASC 350? Accounting Standards Codification 350, better known as 'goodwill impairment testing', outlines a two step process for determining the impairment of goodwill. In the first step, the fair value of a reporting unit is compared to its carrying value. If the fair value is in excess of carrying value, the goodwill of the reporting unit is not impaired, thus the second step of the impairment test is unnecessary. If the carrying value of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss.
What is ASC 360? Accounting Standards Codification 360 is used to test the impairment of long lived assets whenever events or changes in circumstances indicate that the asset's carrying amount may not be recoverable. An initial test is performed to determine whether the undiscounted cash flows are greater than the carrying value of the long lived asset. Should the carrying value be greater than the undiscounted cash flows, the recognition of impairment may be required. The impairment loss is determined as the spread between the discounted cash flows and the carrying value of the long lived asset.
Our Approach: The impairment tests required by ASC 350 and ASC 360 are a two step process to determine if an asset is impaired. Our team of experts is equipped to navigate the entire process for a wide array of assets. Moreover, we are efficient in our methodology and only perform the necessary work tailored to the specific situation. We work directly with the auditor to facilitate the review process and to minimize distractions for management. Our work is highly regarded by the Big Four as well as regional accounting firms.
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