ASC Topic 350 After initial recognition, goodwill and indefinite lived intangible assets are periodically tested for impairment under ASC Topic 350. Such impairment tests are the result of ASC Topic 805's prohibition of pooling of interests and the elimination of goodwill amortization. Duff & Phelps professionals have broad expertise in the initial recognition of values and subsequent impairment testing as well as the interaction of the two standards. They assign the acquired assets, liabilities assumed and residual purchase price to reporting units. They also estimate the fair value of the reporting units and indefinite lived intangible assets. Additionally, Duff & Phelps provides estimates of the implied residual value for reporting units where fair value is below the carrying value. IAS 36 IAS 36: Impairment of Assets requires the testing of goodwill and long-lived intangible assets on an annual basis with other assets tested where there is an indication that the asset may be impaired. Goodwill is tested at a cash generating unit ("CGU") level and is a single step test comparing the carrying value of the CGU to the recoverable amount. Goodwill impairment tests under IFRS frequently give materially different results to those under US GAAP due to the two step test used in ASC Topic 350. Duff & Phelps assists clients in a number of areas including:
| * Providing additional assurance for the board and auditors through independent review and support for key assumptions and forecasts |
| * Addressing auditors' concerns around consistency of approach; sum of the parts analysis; and reconciliation to and explanation of variances from market capitalization, which can result in significant time and cost savings as part of the audit review process |
| * Building well structured and integrated impairment models that can be used for future impairment tests and as part of ongoing business review | |
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On September 15, 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ("Update") No. 2011-8, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment.
On April 22, the Financial Accounting Standards Board (FASB) issued an Exposure Draft titled "Intangibles-Goodwill and Other (Topic 350)". The objective of the proposal is to simplify the requirement to test goodwill for impairment.
Duff & Phelps and The Financial Executives Research Foundation (FERF) announced the results of their 2010 Goodwill Impairment Study in an exclusive webcast for Financial Executive International (FEI) members.
Duff & Phelps and the Financial Executive Research Foundation have issued a research study which features a comparative analysis of goodwill impairments for U.S. publicly-traded companies by industry as well as an extensive survey of Financial Executives International members.
The SEC, PCAOB and auditors have increased their focus on goodwill and asset impairment testing in the current environment. Companies must be prepared to respond to increased auditor and regulatory scrutiny and address issues such as reconciling the fair value of reporting units to market capitalization.