FASB Codificiation Essay

2309 Words Feb 3rd, 2014 10 Pages
November 3, 2013
Accounting 305
FASB Codification

1. The relevant FASB codification standards are as follows…

1. 350 Intangibles – Goodwill & Other
1.2 20 Goodwill
1.3 35 Subsequent Measurement
1.3.1 Overall Accounting for Goodwill (35.1-3)
1.3.2 Recognition & Measurement of Impairment Loss & Step 1 of the
Qualitative Assessment (35.3A-15)
1.3.4 Determine the Fair Value of a Reporting Unit (35.22-23)
1.3.5 Reporting Unit (35.33-38)
2. 280 Segment Reporting
2.1 10 Overall
2.2 50 Disclosure
2.3.1 Operating Segments (50.1-9)
2.3.2 Aggregation Criteria (50.11A-E)

2. There are several major issues that need to be taken into consideration between ABC’s companies, Dynamic and ZD.

- It is a publicly
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In the event that the carrying amount of the reporting unit exceeds its fair value, then step two is also necessary to measure impairment loss if any according to FASB codification 350-20-35.8

3. In the event that either the carrying amount of the reporting unit is zero, negative or exceeds its fair value, the second step of the goodwill impairment test must be performed according to FASB codification 350-20-35.9. The purposes of the second test of goodwill impairment are, “to measure the amount of impairment loss, compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill.”

The firm must then follow FASB codification guidelines 350-20-35.14-17 in performing the second test. The results of these tests are recognized in the following paragraphs and MUST be followed.

FASB codification 350-20-35.11 states that, “If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying amount of goodwill.”

FASB codification 350-20-35.12 states that, “After goodwill impairment loss is recognized, the adjusted carrying amount of goodwill shall be its new accounting basis.”

FASB codification 350-20-35.13 states that the, “Subsequent reversal of a previously recognized goodwill impairment loss is prohibited once the measurement of that loss is recognized.”

These are

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