The core public-company path compares the supplied reporting-unit carrying amount with its supplied fair value and limits the loss to goodwill's carrying amount. A $5,400,000 reporting-unit carrying amount, $5,050,000 fair value, and $700,000 goodwill produce a bounded $350,000 loss.
That result does not value the reporting unit or prove a triggering event. It also does not apply the indefinite-lived asset model, the Topic 360 held-and- used screen, or an elected private-company amortization path.
Always label the model and unit beside the calculation. A correct subtraction under the wrong entity scope is not a correct impairment conclusion.
Apply the distinction
A reporting unit with $5.4 million carrying amount, $5.05 million fair value, and $700,000 goodwill has a $350,000 loss. The loss cannot exceed the goodwill assigned to that unit.
Authority
Read ASC 350-20-35-8 for measurement of a goodwill impairment loss and its goodwill limit.
Put the concept to work
Apply this concept
- Measure a bounded goodwill impairment from supplied reporting-unit carrying amount, fair value, and goodwill carrying amount under the declared core or elected alternative model.
Learning resources
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Build on these ideas
- Reporting unit — Analyze
To apply this concept: Required. Goodwill impairment uses the applicable reporting unit or elected entity-level alternative.