When organizations are financially struggling or affected by external events, several accounting considerations come into play. External events arising from the COVID-19 pandemic and its disruption could intersect with several components of accounting. A brief summary of possible considerations are described below.
Topics: goodwill impairment, going concern, income tax accounting, Revenue recognition, COVID19, Coronavirus, financial statement disclosures, SEC, PPP Loan, Payment Protection Program, credit loss
During the first quarter of 2020, the economic decline caused by the COVID-19 pandemic has raised many questions about the fair value of a variety of assets held in a broad range of industries and companies. This has been demonstrated by the significant declines in public share prices by many public companies as well as the declines noted in the broader stock market indices.
Topics: goodwill impairment, impairment testing, public company, David Lewin, ASC Topic 606, Coronavirus, COVID-19
All entities—not just private companies—will soon have a streamlined process for testing for goodwill impairment. The Financial Accounting Standards Board (FASB) recently released Accounting Standards Update 2017-04, Intangibles—Goodwill and Other (Topic 350)-Simplifying the Test for Goodwill Impairment (ASU 2017-04).
Topics: goodwill, Tests for Impairment of Goodwill, goodwill impairment, FASB, Robert Miller, Testing for Goodwill
Goodwill by accounting standards represents the value of a business above and beyond just its financial and physical assets. Many times the business' intangible values are tracked as goodwill, such as the business' good reputation which generates sales by referral. Measurement of goodwill impairment is a two part test that measures the fair value of a Company’s reporting unit to the reporting unit’s carrying value. The fair value of the reporting unit in the majority of cases is measured with a full-blown business valuation analysis.
Topics: accounting, goodwill, Tests for Impairment of Goodwill, goodwill impairment, qualitative, methodology, step zero, FASB