Goodwill does not remain attached to a deal folder forever. It is assigned to the applicable reporting unit expected to benefit from the combination, then tested in that unit of account under the governing model.
A reporting unit is not automatically the acquired legal entity, a location, an operating segment name, or the smallest system that tracks revenue. The core module supplies the unit so learners can perform and interpret a bounded impairment calculation without pretending to design the entity's reporting- unit structure.
Changing the unit can change what carrying amount and fair value are compared. That is why the unit label and source remain visible in every schedule.
Apply the distinction
Changing the reporting unit changes the carrying amount and fair value compared in the goodwill test. Preserve the supplied unit and its source rather than substituting a legal entity, location, or convenient management label.
Authority
Read ASC 350-20-35-34 for when a component of an operating segment is a reporting unit.
Put the concept to work
Analyze this concept
- Preserve a supplied goodwill reporting unit through assignment, carrying-amount, fair-value, impairment, and disclosure schedules without substituting a legal entity or operating segment.
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Build on these ideas
- Goodwill — Apply
To analyze this concept: Required. The reporting unit is the subsequent-accounting unit for recognized goodwill.
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Use this idea next
- Goodwill impairment — Apply
Required level here: analyze. Required. Goodwill impairment uses the applicable reporting unit or elected entity-level alternative.