Page 1 of 4 D252 Accounting Research and Critical Thinking
D252
Task
Accounting
2 Research and Critical Thinking Task 2.pdf
7/28/2025
Western Governors University
D252 Accounting Research and Critical Thinking
Task 2
Goodwill Impairment Analysis for AMMRC Inc.
Prepared by:
Date: 07/28/2025
A. Summary of Goodwill Impairment Guidance under ASC 350
The Financial Accounting Standards Board (FASB) provides authoritative guidance on
goodwill impairment in ASC Topic 350 – Intangibles – Goodwill and Other. Below are
the relevant treatments based on various factors:
1. When a Company Has Similar Economic Characteristics
Under ASC 350-20-35-33 to 35-38, when reporting units have similar economic
characteristics, entities may aggregate those units for testing purposes if they are
managed together, share similar economic risks, and operate in similar industries
or markets.
2. When a Company Does Not Have Similar Economic Characteristics
According to ASC 350-20-35-33, companies must perform impairment testing
separately for each reporting unit that does not meet the aggregation criteria.
This ensures an accurate reflection of the economic condition of each distinct
unit.
3. Goodwill Impairment for a Public Company
Public companies follow a two-step impairment process (per ASC 350-20-35-
3C). Step 1 compares the fair value of the reporting unit with its carrying amount.
If the fair value is less, Step 2 measures the impairment by comparing the
implied fair value of goodwill with its carrying amount.
4. Goodwill Impairment for a Private Company
Under ASC 350-20-65-2 and the Private Company Council (PCC) alternative,
private companies may amortize goodwill over 10 years (or a shorter useful life)
and may perform a simplified one-step test only when a triggering event occurs.
5. When a Company Elects the Accounting Alternative
Per ASC 350-20-35-63 to 35-66, companies that elect the alternative amortize
goodwill over 10 years and bypass annual impairment testing unless a triggering
event suggests impairment.
6. When a Company Does Not Elect the Accounting Alternative
The company must test goodwill annually and when a triggering event occurs
(ASC 350-20-35-28 to 35-30). It involves comparing the fair value of a reporting
unit to its carrying value and determining the amount of impairment.
7. When a Triggering Event Occurs
If a triggering event (e.g., decline in market value, economic downturn) is
This study source was downloaded by 1827175 from cliffsnotes.com on 01-08-2026 17:37:03 GMT -06:00
D252 Accounting Research and Critical Thinking Task 2.pdf /2026-2027
D252 Accounting Research and Critical Thinking Task 2.pdf 100% correct
https://www.cliffsnotes.com//study-notes/28339622
D252
Task
Accounting
2 Research and Critical Thinking Task 2.pdf
7/28/2025
Western Governors University
D252 Accounting Research and Critical Thinking
Task 2
Goodwill Impairment Analysis for AMMRC Inc.
Prepared by:
Date: 07/28/2025
A. Summary of Goodwill Impairment Guidance under ASC 350
The Financial Accounting Standards Board (FASB) provides authoritative guidance on
goodwill impairment in ASC Topic 350 – Intangibles – Goodwill and Other. Below are
the relevant treatments based on various factors:
1. When a Company Has Similar Economic Characteristics
Under ASC 350-20-35-33 to 35-38, when reporting units have similar economic
characteristics, entities may aggregate those units for testing purposes if they are
managed together, share similar economic risks, and operate in similar industries
or markets.
2. When a Company Does Not Have Similar Economic Characteristics
According to ASC 350-20-35-33, companies must perform impairment testing
separately for each reporting unit that does not meet the aggregation criteria.
This ensures an accurate reflection of the economic condition of each distinct
unit.
3. Goodwill Impairment for a Public Company
Public companies follow a two-step impairment process (per ASC 350-20-35-
3C). Step 1 compares the fair value of the reporting unit with its carrying amount.
If the fair value is less, Step 2 measures the impairment by comparing the
implied fair value of goodwill with its carrying amount.
4. Goodwill Impairment for a Private Company
Under ASC 350-20-65-2 and the Private Company Council (PCC) alternative,
private companies may amortize goodwill over 10 years (or a shorter useful life)
and may perform a simplified one-step test only when a triggering event occurs.
5. When a Company Elects the Accounting Alternative
Per ASC 350-20-35-63 to 35-66, companies that elect the alternative amortize
goodwill over 10 years and bypass annual impairment testing unless a triggering
event suggests impairment.
6. When a Company Does Not Elect the Accounting Alternative
The company must test goodwill annually and when a triggering event occurs
(ASC 350-20-35-28 to 35-30). It involves comparing the fair value of a reporting
unit to its carrying value and determining the amount of impairment.
7. When a Triggering Event Occurs
If a triggering event (e.g., decline in market value, economic downturn) is
This study source was downloaded by 1827175 from cliffsnotes.com on 01-08-2026 17:37:03 GMT -06:00
D252 Accounting Research and Critical Thinking Task 2.pdf /2026-2027
D252 Accounting Research and Critical Thinking Task 2.pdf 100% correct
https://www.cliffsnotes.com//study-notes/28339622
