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Chapter 2 — Subsequent Accounting for Goodwill (After Adoption of ASU 2017-04)

2.4 Quantitative Assessment (Step 1)

2.4 Quantitative Assessment (Step 1)

ASC 350-20
Quantitative Impairment Test
35-4 The quantitative goodwill impairment test, used to identify both the existence of impairment and the amount of impairment loss, compares the fair value of a reporting unit with its carrying amount, including goodwill.
35-5 The guidance in paragraphs 350-20-35-22 through 35-24 shall be considered in determining the fair value of a reporting unit.
35-6 If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired.
35-7 In determining the carrying amount of a reporting unit, deferred income taxes shall be included in the carrying amount of the reporting unit, regardless of whether the fair value of the reporting unit will be determined assuming it would be bought or sold in a taxable or nontaxable transaction.
35-8 If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Additionally, an entity shall consider the income tax effect from any tax deductible goodwill on the carrying amount of the reporting unit, if applicable, in accordance with paragraph 350-20-35-8B when measuring the goodwill impairment loss.