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Carla Dupuis
Fairchild Semiconductors (NYSE: FCS)

Impairment Testing

After a business combination, and after valuing and booking the assets purchased under ASC 805, companies must also test and re-value certain assets purchased, including Goodwill. Under FASB Accounting Standards Codification No. 350 (ASC 350), companies must test the goodwill purchased for impairment at three different points in time:

  1. A transitional test, required at the beginning of the fiscal year in which the statement was adopted. 
  2. An interim test, required at the occurrence of certain “trigger events.” These may include changes in the market or business climate that may lead to a lower value for the reporting unit. 
  3. Annual impairment tests. The two-step impairment tests under ASC 350 rely on a valuation that is similar to the purchase accounting valuation required at the time of the acquisition under ASC 805.

Rely on Pluris to stay on top of changes in accounting standards regarding testing and valuation of goodwill and other acquired intangibles. Read our Accounting Alerts for more information.

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