Task 2 Goodwill Impairment Analysis – AMMRC
Inc. WGU D252
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).
Inc. WGU D252
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).
