Qualitative Assessment of Impairment for Goodwill and Other Indefinite-Lived Intangibles

Cary D. Lange, PhD, CPA, and James M. Fornaro, DPS, CPA, CMA, CFE, and Rita J. Buttermilch, CPA, CGMA

Statement of Financial Accounting Standards (SFAS) 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning in 2002, introduced the two-step impairment test for goodwill. Since that time, many financial statement preparers—particularly those from private companies—have expressed concerns over the cost and complexity associated with this process. FASB has noted that expected efficiencies in the effort required to perform impairment tests, reductions in the overall complexity of measuring the fair value of reporting units, and reductions in the time required to audit these quantitative tests have not necessarily been realized.