Impairment Testing

Applied Valuations is a leading provider of goodwill, intangible and long-lived asset impairment testing.

Applied Valuations provides valuations of goodwill, indefinite-lived intangibles and long-lived assets for impairment testing purposes pursuant to Impairment of Assets (ASC 350/ ASC 360/ IAS 36).

ASC 350

As per accounting guidance, goodwill and indefinite-lived intangible assets are tested for impairment under ASC 350 at least annually, or upon the occurrence of a triggering event. Our in-depth understanding of valuation guidance enables us to assist Clients in identifying segment/ division with impairment risk.

We can assist you with a variety of issues in the impairment testing of goodwill and indefinite-lived intangible assets, including:

• Estimation and reallocation of goodwill among the reporting units.

• Support for the optional Step 0 qualitative assessment as part of the goodwill impairment test and as part of the impairment test for indefinite-lived intangible assets.

• Measurement of the fair value of reporting units, with consideration of market participant assumptions and allocation of shared assets.

• Benchmarking of reporting unit values to the overall entity value to assess the overall reasonableness of the analysis.

• Measurement of the fair value of indefinite-lived intangible assets, including Tradename, Customer Relationship, etc.

ASC 360

Under this evaluation, we assess the recoverability of a long-lived asset individually (or in the context of a group of assets), based on the lowest level of identifiable cash flows that are independent from the cash flows of other assets, and over the economic life of the asset (or the primary asset of the group). If it is concluded that the asset (or asset group) is not recoverable, an impairment loss is recognized based on the difference between the carrying amount and fair value of the asset (or group).

We can assist you with a variety of issues in determining the recoverability and fair value measurement, as required, of long-lived assets, including:

• Analysis of projections to assess whether the undiscounted amounts provide for the recoverability of the asset or group.

• Measurement at fair value of the asset (or group) using appropriate valuation methods, for those assets (or groups) that fail the recoverability test.

• Assist the Management in the allocation of impairment loss, in situation of analysis carried out at asset group level.

IAS 36

IAS 36 requires the testing of goodwill, indefinite-lived intangible assets and long-lived assets within its scope when indicators of impairment exist, or at least on an annual basis for goodwill and indefinite-lived intangibles. Goodwill is tested at cash generating unit (CGU) level and is a single step test comparing the carrying value of the CGU to its recoverable amount, which is the higher of Value in Use (VIU) or Fair Value Less Costs of Disposal (FVLCD).

Elevate Valuations has developed an in-depth understanding of the valuation requirements of IAS 36, as well as the key areas of concern to auditors and regulators. We can assist you with bouquet of services, including:

• Allocation of goodwill to CGUs.

• Measurement of the VIU and FVLCD of CGUs.

• Measurement of the fair value of indefinite-lived assets and other assets within the scope of IAS 36 that generate cash flows that are largely independent from those of other assets.