Impairment Testing
The McLean Group’s Valuation Advisory practice performs goodwill impairment testing and long-lived asset impairment testing analyses in accordance with ASC 350 & 360. Our team has worked with hundreds of privately-held and publicly traded companies to assist in their annual impairment tests. In addition, as noted in Accounting Standards Update (ASU) 350, goodwill of a reporting unit should be tested between annual tests “if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount”. Examples of such events and circumstances from ASU 350 include those below.
Events That Trigger A Test
- Macroeconomic conditions such as a deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets
- Industry and market considerations such as a deterioration in the environment in which an entity operates, an increased competitive environment, a decline in market-dependent multiples or metrics, a change in the market for an entity’s products or services, or a regulatory or political development
- Cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows
- Overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods
- Other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation
- Events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing of all or a portion of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit
- If applicable, a sustained decrease in share price, considered in both absolute terms and relative to peers
Team Leaders
Who leads the practice
Representative Engagements
Selected impairment engagements
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