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Fair Value Measurement: Practical Guidance and Implementation, 2nd Edition by Mark L. Zyla

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APPENDIX FIVE A

Example of a Qualitative Impairment Analysis—PlanTrust, Inc.

FINANCIAL ACCOUNTING STANDARDS BOARD ASC 350,INTANGIBLES'GOODWILL AND OTHER

Under ASC 350,Intangibles—Goodwill and Other, goodwill is not amortized. Rather, goodwill is assessed for impairment at a level referred to as a reporting unit.Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value.1 In September 2011, the FASB issued Accounting Standards Update 2011-08 (ASU 2011-08),Testing Goodwill for Impairment. The update permits an entity to qualitatively assess whether the fair value of a reporting unit is less than its carrying amount. Or, the entity has the option to forgo the qualitative assessment and simply perform step one of the two-step goodwill impairment test. The FASB's amendments apply to public as well as nonpublic entities, are subject to early adoption, and are effective for fiscal years beginning after December 15, 2011. Based on a qualitative assessment, if the entity determines that events and circumstances indicate that its fair value is not less than its carrying value using a more likely than not criterion (> 50 percent), then no further testing is required. If the entity determines that it is more likely than not that the fair value of the reporting unit is less than the carrying value, then the entity must perform step one of the two-step goodwill impairment test, as previously provided under ASC 350. A two-step impairment test ...

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