WGU D252 Task 2 Goodwill Impairment
Task 2 Goodwill Impairment Analysis – AMMRC Inc.
WGU D252
Brittany Pery
06/24/2025
The Financial Accounting Standards Board (FASB) provides an outline and guidance for
goodwill impairment in the ASC 350- Intangible- Goodwill and others. The section referenced
summarizes the treatment of goodwill impairment given various organizational scenarios. Each
summary below is supported by its appropriate codification reference (FASB, 2023)
A1. Treatment When a Company Has Similar Characteristics
Goodwill impairment treatment for when a company has similar economic characteristics is
outlined in ASC 350-20-35-33 through 35-35. An entity may assess them as a single reporting
unit for impairment testing. Doing so simplifies the process and may defer impairment
recognition if the combined unit exceeds fair value.
A2. Treatment When a Company Does Not Have Similar Economic Characteristics
Goodwill impairment treatment for when a company does not have similar economic
characteristics is outlined in ASC 350-20-35-31 to 35-32. In this case, each unit must be tested
separately for goodwill impairment. This approach helps to ensure that any declines in value are
accurately captured for each section of the business.
A3. Treatment for a Public Company
Goodwill impairment for a public company is outlined in ASC 350-20-35-3C (for the optional
one-step test) and ASC 350-20-35-1 through 35-19 (for the legacy two-step test). Public
companies must follow either a one-step or two-step test, depending on the effect of the
accounting standards. Step one is to compare the fair value of a reporting unit to its carrying
amount. If the fair value is less than the carrying amount, goodwill is considered impaired. Step
two measures the impairment loss as the difference between the carrying value of goodwill and
its implied fair value.
A4. Treatment for a Private Company
Goodwill impairment treatment for a private company is outlined in ASC 350-20-35-62 through
35, 68, and ASC 350-20-65-2. Private companies can apply the same approach as public
companies or elect the accounting alternative that simplifies accounting in one of two ways:
testing for impairment when triggering events occur, or amortizing goodwill over 10 years (or a
shorter period).
, A5. Treatment When the Accounting Alternative is Elected
Goodwill impairment treatment for when a company elects the accounting alternative is outlined
in ASC 350-20-35-62 through 35-68. Suppose a private company elects the accounting
alternative under ASU 2014-02. In that case, it must do the following: amortize goodwill over a
useful life not exceeding 10 years, perform an impairment test only when a triggering event
occurs, and perform a simplified impairment test at the entity level.
A6. Treatment When the Accounting Alternative is Not Elected
Goodwill impairment treatment for when a company does not elect the accounting alternative is
outlined in ASC 350-20-35-3 through 35-22. If a company does not elect an accounting
alternative, the company must perform an annual impairment test and follow either the one-step
or two-step method. Which step of the process will depend on the most recent guidance it has
adopted.
A7. Treatment When a Triggering Event Occurs
Goodwill impairment treatment for when a company has a triggering event occur is addressed in
ASC 350-20-35-3C and 35-66. In this situation, companies must assess whether it is more likely
than not that goodwill is impaired. If it is determined that goodwill is impaired, a quantitative test
must be performed immediately.
A8. Treatment When No Triggering Event Occurs
Goodwill impairment treatment for when a company does not have a triggering event occur is
outlined in both ASC 350-20-35-28 (annual test) and ASC 350-20-35-66 (Private company
alternative). If no triggering event is identified, companies are not generally required to test for
impairments before the annual test date. Private companies that have elected the accounting
alternative are entirely exempt from impairment testing unless triggering events occur.
Part B Application of ASC 350 to AMMRC Inc.
Task 2 Goodwill Impairment Analysis – AMMRC Inc.
WGU D252
Brittany Pery
06/24/2025
The Financial Accounting Standards Board (FASB) provides an outline and guidance for
goodwill impairment in the ASC 350- Intangible- Goodwill and others. The section referenced
summarizes the treatment of goodwill impairment given various organizational scenarios. Each
summary below is supported by its appropriate codification reference (FASB, 2023)
A1. Treatment When a Company Has Similar Characteristics
Goodwill impairment treatment for when a company has similar economic characteristics is
outlined in ASC 350-20-35-33 through 35-35. An entity may assess them as a single reporting
unit for impairment testing. Doing so simplifies the process and may defer impairment
recognition if the combined unit exceeds fair value.
A2. Treatment When a Company Does Not Have Similar Economic Characteristics
Goodwill impairment treatment for when a company does not have similar economic
characteristics is outlined in ASC 350-20-35-31 to 35-32. In this case, each unit must be tested
separately for goodwill impairment. This approach helps to ensure that any declines in value are
accurately captured for each section of the business.
A3. Treatment for a Public Company
Goodwill impairment for a public company is outlined in ASC 350-20-35-3C (for the optional
one-step test) and ASC 350-20-35-1 through 35-19 (for the legacy two-step test). Public
companies must follow either a one-step or two-step test, depending on the effect of the
accounting standards. Step one is to compare the fair value of a reporting unit to its carrying
amount. If the fair value is less than the carrying amount, goodwill is considered impaired. Step
two measures the impairment loss as the difference between the carrying value of goodwill and
its implied fair value.
A4. Treatment for a Private Company
Goodwill impairment treatment for a private company is outlined in ASC 350-20-35-62 through
35, 68, and ASC 350-20-65-2. Private companies can apply the same approach as public
companies or elect the accounting alternative that simplifies accounting in one of two ways:
testing for impairment when triggering events occur, or amortizing goodwill over 10 years (or a
shorter period).
, A5. Treatment When the Accounting Alternative is Elected
Goodwill impairment treatment for when a company elects the accounting alternative is outlined
in ASC 350-20-35-62 through 35-68. Suppose a private company elects the accounting
alternative under ASU 2014-02. In that case, it must do the following: amortize goodwill over a
useful life not exceeding 10 years, perform an impairment test only when a triggering event
occurs, and perform a simplified impairment test at the entity level.
A6. Treatment When the Accounting Alternative is Not Elected
Goodwill impairment treatment for when a company does not elect the accounting alternative is
outlined in ASC 350-20-35-3 through 35-22. If a company does not elect an accounting
alternative, the company must perform an annual impairment test and follow either the one-step
or two-step method. Which step of the process will depend on the most recent guidance it has
adopted.
A7. Treatment When a Triggering Event Occurs
Goodwill impairment treatment for when a company has a triggering event occur is addressed in
ASC 350-20-35-3C and 35-66. In this situation, companies must assess whether it is more likely
than not that goodwill is impaired. If it is determined that goodwill is impaired, a quantitative test
must be performed immediately.
A8. Treatment When No Triggering Event Occurs
Goodwill impairment treatment for when a company does not have a triggering event occur is
outlined in both ASC 350-20-35-28 (annual test) and ASC 350-20-35-66 (Private company
alternative). If no triggering event is identified, companies are not generally required to test for
impairments before the annual test date. Private companies that have elected the accounting
alternative are entirely exempt from impairment testing unless triggering events occur.
Part B Application of ASC 350 to AMMRC Inc.
