FASB Issues Proposed ASU Related to Goodwill Impairment Test

On October 6, 2010, the FASB issued a proposed ASU, How the Carrying Amount of a Reporting Unit Should Be Calculated When Performing Step 1 of the Goodwill Impairment Test. The proposed ASU requires that: (1) an entity use an equity premise to calculate the carrying amount of a reporting unit when performing Step 1 of the goodwill impairment test, and (2) if a reporting unit has a zero or negative carrying amount, the entity must assess, on the basis of qualitative factors, whether it is more likely than not that goodwill impairment exists (i.e., if it is more likely than not that goodwill impairment exists, Step 2 must be performed).

• Click here for a copy of the ASU
• Click here for background related to the issue covered by the ASU as detailed in our July 29, 2010 Newsfeed entry