Blog Details


GAAP Accounting requires a purchase price allocation of an acquisition’s intangible assets. Subsequent to the purchase price allocation, GAAP Accounting requires an annual assessment of impairment in ASC 350 – Intangible – Goodwill and Other. Goodwill impairment testing is complex and requires multiple steps. 

In addition, GAAP Accounting requires subsequent measurement of finite-lived intangible assets per ASC 360 – Property, Plant, and Equipment: Impairment or Disposal of Long-Lived Assets. Impairment is recognized if the carrying amount of an intangible asset is not recoverable and its carrying value exceeds its fair value.

ASC 350

Impairment may include goodwill or certain other intangible assets. These assets may be required to be tested for impairment at the reporting unit level.

 Testing is typically performed annually, but the guidelines also require interim impairment testing of goodwill and certain other intangibles when certain triggering events occur.

Some examples of possible triggering events provided in the relevant accounting literature include:

  • Deterioration of industry conditions


  • Deterioration of macroeconomic conditions

  • Deterioration of market multiples/metrics
  • Deterioration of earnings/cashflows

ASC 360

Finite-lived, long-lived assets are tested for impairment when a triggering event occurs.

Thus, companies’ long-lived assets may also need to be tested for impairment in the current market environment.

Order of testing for assets held and used

  • Indefinite-lived intangible assets under ASC 350.


  • Long-lived assets (asset group) under ASC 360, if a triggering event has occurred.
  • Goodwill of a reporting unit under ASC 350.
  • Impairment charges are recorded after each test above before moving to the subsequent test.


Comments are closed.