Accounting Method Of Goodwill : The Performance And Financial Condition Of Private Companies

Goodwill is considered impaired when the implied fair value of goodwill in a reporting unit of a company is less than its carrying amount, or book value, including any deferred income taxes. By qualitative factors, if the fair value is less than its book value (likelihood more than 50%), two step of the goodwill impairment test is necessary. According to ASC 350-20-35-2 and 3(A&B&D), if the company determines that it is not more likely than not that fair value is less than the book value, it does

If the 5-year amortization were applied in its place of the 40-year timetable, then it is necessary for Blockbuster to identify the goodwill in larger amounts. This would increase tax liability of Blockbuster, which would have represented a loss of $0.09 (0.58 - 0.49) per share

loss and is not reversed in a subsequent period.On disposal of an operation within a CGU, the attributable amount of goodwill is included in the determination of the profit

Goodwill is capitalized and amortized and may be written off to reserves in the first year.

9. If Six Flags’ goodwill has no economic value, the amount reported on the balance sheet is an example of what type of measurement error (gaap-based measurement error, unintentional measurement error, or intentional measurement error).

Since 2001, amortization would not permitted for goodwill assets. Instead write-down of goodwill entity with continuous losses must be done.

4. The accounting for income taxes will have to be revised. Pam suggests that the first entry be reversed and a new one be set up. Pam also was informed by Linda Durkee that purchased goodwill could be amortized over 15 years and was deductible for income tax purposes. Consequently, Hydromaint has elected to amortize goodwill over 15 years.

We will discuss whether the Company’s approach for testing goodwill for impairment after recognizing an impairment charge related to a long-lived asset group classified as held-and-used is appropriate. This issue pertains to whether it is feasible to have a long-lived asset impairment without goodwill impairment.

Goodwill Impairment is the Goodwill that has become or is considered to be of lower value than at the time or purchase. From an accounting perspective, when the carrying value of the goodwill exceeds the fair value, then it is considered to be impaired. Negative publicity about a firm can create goodwill impairment, as can the reduction of brand-name recognition. Since the Financial Accounting Standards Board (FASB) first introduced its standards update on testing for goodwill impairment (ASU 2011-08), entities with goodwill on their balance sheet have had the option when testing goodwill for impairment to first assess qualitative factors as a basis for determining whether it is necessary to perform the traditional two-step approach described in ASC Topic 350. The optional qualitative assessment is commonly referred to as “step zero.”

(1) Performed a key word search using goodwill, amortized. I scrolled down to section 35 subsequent measurement of topic 350 Intangibles- Goodwill and other.

Please note that although the testing of the bank reconciliation provides further audit evidence over management’s

 Audit Process 2-3 Chapter 02 - Financial Reporting and Analysis   Generally Accepted Auditing Standards Auditing Procedures Audit Report Types of Audit Qualifications ―Except for‖ Qualification Adverse Opinion Disclaimer of Opinion Analysis Implications from Auditing Analysis Implications of the Audit Process Audit Risk and Its Implications Analysis Implications of Auditing Standards Analysis Implications of Auditor Opinions Analysis Implications of Explanatory Language for Uncertainties Analysis Implications of the SEC Appendix 2B: Earnings Quality  Determinants of Earnings Quality Accounting Principles  Income Statement Analysis of Earnings Quality Analysis of Maintenance and Repairs Analysis of Advertising Analysis of Research and Development

Goodwill is a long-term asset categorized as an intangible asset. The amount of goodwill is the cost to purchase the business minus the

The issue of accounting for goodwill has commonly been an area of debate between private and public companies. As the PCC conducted research on the matter they found that many private company stakeholders indicated that the benefits of accounting for goodwill under the traditional GAAP method was worth the associated cost of doing so. The private company financial statement users found that little decision-useful information resulted from the expensive accounting method of goodwill. Many who analyze private companies disregard goodwill when determining the performance and financial condition of private companies. In a survey of financial statement preparers it was found that they did not believe that previous rules for private companies regarding goodwill recognition were inadequate and did not save much cost to these smaller private companies. (Lange, 1) In the amendment created by the influence of the PCC, privately held companies have an optional election for an alternative measure of goodwill. The formal explanation of the amendment is as follows: “An entity within the scope of the amendments that elects the accounting alternative in this Update should amortize goodwill on a straight-line basis over ten years, or less than ten years if the entity demonstrates that another useful life is more appropriate (Lange, 2).” US GAAP which pertains to public companies requires that goodwill be tested annually for impairment or in some cases more frequently. In addition,

The audit committee member’s perspective as to the committee’s current composition is problematic. According to SOX 2002, as least one member of the audit committee should be a financial expert. Thus, changes must be made to the current composition of the committee. Even if all committee members obtain extensive industry experience, without professional accounting knowledge, they are unlikely to detect misstatements and frauds caused by the deficiencies in the internal control system. The existence and appearance of at least one financial expert is necessary.