GOODWILL IMPAIRMENT TESTING

Goodwill impairment, in Canada and the U.S., is defined as the difference between the book value of goodwill and the implied fair market value of goodwill. Unlike other assets, goodwill cannot be defined as a stand-alone asset and must be valued as a residual of all other assets. Therefore, the estimation of goodwill impairment is not as simple as measuring the difference between market capitalization and net book value. There is a greater emphasis on asset valuation in determining goodwill impairment. Therefore, it is critical for any goodwill impairment analysis that the valuation firm has a thorough knowledge of tangible and intangible asset valuation methodology, and purchase price allocation. Evans & Evans has this experience and expertise.

The assessment of goodwill impairment is a subjective process, especially initially. To help ensure the accuracy of your goodwill impairment testing, the professionals at Evans & Evans use the latest techniques and methods to ensure reliable impairment testing.

Businesses must perform the “Goodwill Impairment Test” on an annual basis (with certain exceptions) under differently named, but similar, rules in Canada and the U.S. This goodwill impairment testing process must be conducted at the reporting unit level, defined as the lowest level of an entity; i.e., business units, subsidiaries, operating units, divisions, etc.

There are two steps to the goodwill impairment testing process:

Evans & Evans has the personnel, experience and research resources required to provide the kind of goodwill impairment testing that will stand up to Canadian regulatory as well as U.S. SEC scrutiny.

A goodwill impairment opinion from Evans & Evans is the result of a comprehensive analysis that takes into account all areas of concern.

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