Essay about Gators Electronic

1411 WordsSep 11, 20146 Pages
Succint: Gator Electronics Inc. (“Gator”) is an electronics manufacturer that sells electronic products to third-party retail centers in approximately 100 countries. Gator is an SEC registrant. You are planning to audit the current-year goodwill impairment analysis of Gator. Gator has performed its annual goodwill impairment analysis as of December 31, 20X3, with the assistance of an external valuation specialist, Management’s Expert. Gator elected not to perform the qualitative assessment for determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount and proceeded with Step 1 of the quantitative two-step goodwill impairment test for all reporting units. On the basis of…show more content…
In the absence of observable market prices, GAAP requires fair value to be based on the best information available in the circumstances. 06. Assumptions used in fair value measurements are similar in nature to those required when developing other accounting estimates. However, if observable market prices are not available, GAAP requires that valuation methods incorporate assumptions that marketplace participants would use in their estimates of fair value whenever that information is available without undue cost and effort. If information about market assumptions is not available, an entity may use its own assumptions as long as there are no contrary data indicating that marketplace participants would use different assumptions. These concepts generally are not relevant for accounting estimates made under measurement bases other than fair value. Section 342, Auditing Accounting Estimates, provides guidance on auditing accounting estimates in general. This section addresses considerations similar to those in section 342 as well as others in the specific context of fair value measurements and disclosures in accordance with GAAP. -To mitigate the risk about the valuation made by a valuation specialist AICPA disclosed in AU sec 328: Engaging a Specialist 21. When planning to use the work of a specialist in auditing fair value measurements, the auditor considers whether the specialist's understanding of

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