IFRS and US GAAP Goodwill impairment

CFA Level II
#1

Is there a material difference between IFRS and US GAAP goodwill impairment tests? I ask in the context of calculating whether goodwill is impaired after business combinations using the acquisition method. I don’t believe there is a material difference, but thought I would check with you guys just in case. Mike

#2

don’t believe theres a difference in the tests, however i do believe under IFRS, previously impaired goodwill can be written back up, while under GAAP, once its written down, no recovery can occur

#3

I knew that was the case for write downs of intercorporate investments. Didn’t know it was also the case for goodwill. thanks, Mike Btw congrats on the kid…

#4

Also, I believe IFRS allow the partial/full goodwill method while GAAP only allows the Full method. Please correct me if I am wrong.

#5

treasexmr that is correct.

#6

Not a huge difference. Just remember GAAP is 2 steps, IFRS is 1.

#7

YES THERE IS US GAAP: Focus on: Reporting Unit Compares: Carrying Value Vs FAIR VALUE Impairment Loss = Carrying Value of Goodwill - IMPLIED Value of Goodwill Implied Value of Goodwill = Fair Value of the Reporting Units - Sum of Fair Value of NET ASSETS of Reporting Unit IFRS: Focus on: Cash Generating Unit Compares: Carrying Value Vs RECOVERABLE AMOUNT Impairment Loss = Carrying Value of CGU - Recoverable Amount of CGU Please correct me if I am wrong. Yes , to summarize US GAAP involves 2 steps, while IFRS just 1.

#8

is there a material difference between fair value and recoverable amount? that is the crux of the matter…

#9

Well that would differ on a case-by-case basis now, wouldn’t it ? I would suggest you look up the definitions by the IASB of “Recoverable Amount” and by the FASB of “Fair Value” then. Honestly, I fail to see the need to delve any deeper. No offense intended.

#10

i would be shocked if any of this came up - is there any LOS about goodwill impairments at all? this was covered in L1