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

Chapter 2 — Subsequent Accounting for Goodwill

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Chapter 2 — Subsequent Accounting for Goodwill

2.1 Overall Accounting for Goodwill

2.1.1 Scope (After Adoption of ASU 2017-04)

2.1.2 Internally Generated Goodwill

2.2 Recognition and Measurement of an Impairment Loss

2.3 Qualitative Assessment (Step 0)

2.3.1 Performing the Optional Qualitative Assessment

2.3.2 Identifying Inputs and Assumptions That Most Affect Fair Value

2.3.3 Identify Relevant Events and Circumstances That May Have an Impact on the Inputs and Assumptions

2.3.4 Evaluate, Both Individually and in the Aggregate, the Impact of Events and Circumstances on the Inputs to Determine Whether It Is More Likely Than Not That the Fair Value of a Reporting Unit Is Less Than Its Carrying Amount

2.3.5 Example Illustrating a Qualitative Assessment

2.4 Quantitative Assessment (Step 1)

2.4.1 Determining the Fair Value of a Reporting Unit

2.4.2 Impact of Control Premium on Measuring the Fair Value of a Reporting Unit

2.4.3 Determining Fair Value When an Entity Has Only One Reporting Unit

2.4.4 Use of an Equity Premise Versus an Enterprise Premise in the Determination of a Reporting Unit’s Fair Value

2.4.5 Changing the Method of Determining the Fair Value of a Reporting Unit

2.4.6 Market Capitalization Reconciliation

2.4.7 Example Illustrating the Comparison of Fair Value With the Carrying Amount

2.4.8 Deferred Income Tax Considerations Related to Performing the Goodwill Impairment Test

2.4.9 Reporting Units With Zero or Negative Carrying Amounts

2.4.10 Goodwill Impairment Testing When Reporting Unit Is Not Wholly Owned

2.5 When to Test Goodwill for Impairment

2.5.1 Testing Different Reporting Units on Different Dates

2.5.2 Performing the Goodwill Impairment Test When the Amount of Recently Acquired Goodwill Has Only Been Determined Provisionally

2.5.3 Goodwill Impairment Testing Must Be Completed Before Financial Statements Are Issued

2.5.4 Changing the Date of the Annual Goodwill Impairment Test

2.5.5 Assessing Goodwill for Impairment Between Annual Testing Dates

2.5.6 Order of Testing Goodwill and Other Assets for Impairment

2.6 Identification of Reporting Units

2.6.1 Step 1 — Identify the Operating Segments

2.6.2 Step 2 — Identify the Components of Each Operating Segment and Determine Whether Each Component Meets the Definition of a Reporting Unit

2.6.3 Step 3 — Aggregate Components That Have Similar Economic Characteristics

2.6.4 Reassessment of Aggregation Criteria for Reporting Units

2.6.5 Identification of Reporting Units — Examples

2.6.6 Equity Method Investments as Reporting Units

2.7 Assigning Assets and Liabilities to a Reporting Unit

2.7.1 Assigning Assets and Liabilities to Reporting Units

2.7.2 Example Illustrating the Assignment of Assets and Liabilities to Reporting Units

2.7.3 Entities With a Single Reporting Unit

2.7.4 Interaction Between Assigning Assets and Liabilities to Reporting Units and Segment Reporting

2.8 Assigning Goodwill to Reporting Units

2.8.1 Assigning Goodwill When the Entire Entity Is Revalued

2.8.2 Assigning Recently Acquired Goodwill to Reporting Units During the Measurement Period

2.9 Reorganization of Reporting Structure

2.10 Goodwill Impairment Testing by a Subsidiary

2.11 Disposal of All or a Portion of a Reporting Unit

2.11.1 Carve-Out Financial Statements

2.11.2 Spin-Offs

2.11.3 Transactions Between Entities Under Common Control

2.12 Equity Method Goodwill

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This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.