FASB Codificiation

Powerful Essays
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.

Dynamic:
- It is a publicly traded company that ABC has 80% stake in.
- The firm experienced a 15% loss within the last year, a significant value
- There is a labor agreement with the employee union expected 02/14
- There have been significant industry changes that Dynamic has had to accept

ZD:
- It is a privately owned company by ABC
- The firm is now the “industry leader/standard setter”
No replication among competitors for state of the art sensor manufacturing

all of these factors could prove critical in determining if one or both entities faced impairment or other significant changes in goodwill since its original recording. Under current FASB guidelines, 350-20-35.3, “An entity may first assess qualitative factors to determine whether it is necessary to perform the two-step goodwill impairment test If determined to be necessary, the two-step impairment test shall be used to identify potential goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any).

3. There are a multitude of steps that ABC Company must take as part of its valuation process in the firm’s preparation of its 2013 consolidated financial statements.

1. Section 350-20-35.3A, “An entity may assess qualitative factors to determine

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