U.S. GAAP Codification of Accounting Standards

U.S. GAAP Codification of Accounting Standards
Codification Topic 350-20: Goodwill and Other

Goodwill
   --> not amortized
         [asc 350-20-35-1]

   --> tested for impairment
         at the level of a reporting unit

Impairment Loss
   --> two step approach
   --> step 1: impairment test for a reporting unit
         step 2: impairment test for goodwill

   Step 1
   --> is (a) < (b)?
        (a) fair value of a reporting unit
        (b) carrying amount of a reporting unit
   --> if yes, go to step 

   Step 2
   --> is (c) < (d)?
        (c) implied fair value of goodwill of the reporting unit
        (d) carrying amount of goodwill of the reporting unit
   --> if yes, impairment loss is recognized

   "Reversal" of impairment loss is not allowed.
   [asc 350-20-35-13]

[IFRS]
   IAS 36: Impairment of Assets
   Goodwill impairment test
   [IAS 36-pr 80-108]

   1. Goodwill is allocated to Cash Generating Unit (CGU)
   2. Impairment test for CGU: Is recoverable amount < carrying amount?
   3. Impairment loss of CGU
       --> allocated to reduce the carrying amount of goodwill, first
       --> then, allocated to other assets

[U.S. GAAP]
   asc 350-20
   1. Impairment test for "reporting unit"
       --> Is fair value of reporting unit < carrying amount?
   2. If yes, impairment test for "goodwill"
       --> Is implied fair value of goodwill < carrying amount?
   3. If yes, impairment loss for goodwill is recognized.

International Financial Reporting Standards (IFRS)

   IAS 36: Impairment of assets
   IAS 38: Intangible assets