Market volatility: Consideration of goodwill impairment
FINANCIAL REPORTING INSIGHTS |
As most people are aware, there was a great deal of volatility in the stock market during the last quarter of 2018. Whether or not an entity has adopted the private company accounting alternative for goodwill, impairment of goodwill needs to be considered when a triggering event occurs. Depending on the particular situation, a significant drop in share price could be such a triggering event. Therefore, it is important to document these goodwill impairment considerations if (a) the entity’s measurement period ends on a date other than December 31, 2018, or (b) the entity has elected the private company accounting alternative and it is more likely than not that the fair value of the entity (or reporting unit) is below its carrying amount.
Further information regarding the accounting for goodwill is available in our white papers: