Goodwill Impairment Testing
Goodwill Impairment Testing
Rigorous, Documented, Defensible
Annual and Triggering Event Assessments
We support both annual goodwill impairment tests and interim assessments triggered by changes in market conditions, operating performance, or other indicators of potential impairment.
Qualitative and Quantitative Analysis
We perform the qualitative assessment (step zero) to determine whether a quantitative test is required, and execute the quantitative impairment test when it is.
Audit-Ready Workpapers
Every impairment assessment produces documentation structured to support your external auditors -- clear assumptions, sensitivity analyses, and a well-reasoned conclusion.
100+
Successful transactions completed
20+
Years of experience
$5 - 50m
Average size of transaction
$20-200m
Average market cap of clients across tech, manufacturing & services
Goodwill and Intangible Asset Impairment Testing Under ASC 350
What makes us different?
Goodwill impairment testing is required annually and whenever a triggering event suggests the fair value of a reporting unit may have declined below its carrying value. For companies that have made significant acquisitions, goodwill can be a material asset — and impairment charges, when they occur, are large and attract significant attention from investors and analysts. Getting the testing right, and documenting the conclusions thoroughly, is important for both financial reporting accuracy and audit efficiency.
Corviniti supports goodwill impairment testing engagements under ASC 350, providing the financial analysis, valuation support, and documentation that management needs to complete the assessment. We conduct the qualitative evaluation, determine whether the quantitative test is required, and support the quantitative analysis — including the determination of reporting unit fair values and the comparison to carrying values.
We work alongside management and valuation specialists, coordinating the financial analysis inputs with the fair value determination and preparing the documentation package that external auditors will review. Our focus is on a technically sound, well-documented conclusion that clearly supports management’s impairment determination.
We help with:
- Reporting Unit Identification: Determine the appropriate reporting units for goodwill impairment testing based on operating segment definitions and the level at which management monitors the business.
- Qualitative Assessment (Step Zero): Conduct the qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
- Triggering Event Assessment: Evaluate whether events or changes in circumstances between annual test dates constitute a triggering event requiring an interim impairment assessment.
- Quantitative Impairment Test Support: Support the quantitative impairment test, including coordination with valuation specialists, review of fair value assumptions, and comparison of fair value to carrying value.
- Carrying Value Determination: Calculate the carrying value of each reporting unit, including the allocation of assets, liabilities, and goodwill.
- Goodwill Allocation to Reporting Units: Assist with the allocation of goodwill to reporting units when a reorganization or change in reporting structure requires reallocation.
- Impairment Charge Calculation: Calculate the impairment charge when a reporting unit’s carrying value exceeds its fair value, and prepare the related journal entries and disclosures.
- Indefinite-Lived Intangible Asset Impairment: Support impairment testing for indefinite-lived intangible assets under ASC 350-30, including trade names and certain licenses.
- Long-Lived Asset Impairment (ASC 360): Support impairment assessments for property, plant, and equipment and finite-lived intangible assets under ASC 360.
- Impairment Disclosure Preparation: Prepare the required footnote disclosures for goodwill impairment testing, including the reporting unit structure, testing methodology, and conclusions.
Why Choose Us?
Big 4 expertise,
boutique agility
Corviniti provides goodwill impairment testing support with Big 4 technical depth and the practical focus of a boutique. We produce documentation that clearly supports management’s conclusions and moves efficiently through external audit review.
Startups and US Capital Markets are our focus
From newly public companies managing their first post-acquisition goodwill impairment test to established companies navigating a triggering event, Corviniti provides the technical support that goodwill impairment assessments require.
- Startup and Fundraising Focused (including Venture Capital)
- Built for Capital Markets (including IPO and SPAC transactions)
- Boutique Attention
- Big Four Experience
- Transaction Deadline Oriented
Contact Us To
Learn More
Call: (347) 472-1115
Email: info@corviniti.com
Tell us about your goodwill balance, reporting unit structure, and testing timeline. We will respond within 24 hours.
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Frequently Asked Questions
Goodwill impairment testing is required at least annually, at the same time each year, at the reporting unit level. It is also required on an interim basis whenever events or changes in circumstances indicate that the fair value of a reporting unit may have fallen below its carrying value — these are called triggering events. Common triggering events include a significant decline in stock price, a significant adverse change in business conditions, loss of a key customer, an adverse regulatory development, or a significant restructuring.
A reporting unit is the level of an entity at which goodwill is tested for impairment. It is an operating segment or one level below an operating segment (a component) for which discrete financial information is available and regularly reviewed by segment management. The determination of reporting units is an important judgment that affects the impairment testing results — combining reporting units with different fair value characteristics can mask impairment.
The qualitative assessment allows companies to skip the quantitative impairment test if it is more likely than not that the fair value of the reporting unit exceeds its carrying value. The assessment considers relevant events and circumstances — macroeconomic conditions, industry trends, company-specific factors, market considerations, and changes in carrying value. If the qualitative assessment concludes that it is more likely than not that no impairment exists, the quantitative test is not required. If it cannot reach that conclusion, the quantitative test must be performed.
Fair value of a reporting unit is most commonly determined using a combination of the income approach (discounted cash flow analysis) and the market approach (comparable company multiples or transaction multiples). The income approach requires projections of future cash flows and a discount rate reflecting the risk of those cash flows. The market approach uses observable data from comparable public companies or recent transactions. For public companies, the implied market capitalization (stock price times shares outstanding) also serves as a data point, though it is typically adjusted for a control premium.
If a triggering event occurs, management must determine whether the fair value of the affected reporting unit is more likely than not less than its carrying value. If so, a quantitative impairment test must be performed. The timing can be challenging — triggering event assessments often need to be completed quickly, and the supporting documentation needs to be available before the quarterly filing deadline. We support interim impairment assessments on the timeline that quarterly reporting requires.
Under the simplified impairment model (adopted by most companies following ASU 2017-04), the impairment charge equals the amount by which the carrying value of the reporting unit exceeds its fair value, limited to the carrying amount of goodwill. The charge is recognized as an operating expense in the income statement and is not tax-deductible in most cases (where goodwill was not deductible at acquisition). It is a non-cash charge that does not affect operating cash flows.
Yes. We regularly work with foreign private issuers and companies with cross-border structures, including IFRS reporting, US GAAP reconciliations, and multi-entity consolidations for companies with domestic and international subsidiaries.
In most cases, we can begin within a few days of finalizing our agreement. Our onboarding process is straightforward — a brief discovery session, a clear statement of work, and secure access setup. We do not have lengthy intake procedures that delay the start of actual work.
