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FAS 141 and 142 - Impairment StudiesFAS 144 - Impairment StudiesFAS 133 - Embedded Derivatives FAS 123R - Options The Financial Accounting Standards Board approved the issuance of Statements of Financial Accounting Standards No. 141 and 142, Goodwill and Other Intangible Assets. The Statements supersede APB Opinion No. 17, Intangible Assets, and take a very different approach to how goodwill and other intangible assets are accounted for. The Statements utilize the guidance in FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, for estimating the fair values used in testing both goodwill and other intangible assets that are not being amortized for impairment. The accounting for a recognized intangible asset is based on its useful life to the reporting entity. An intangible asset with a finite life is amortized. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to future cash flows. An entity shall evaluate the remaining useful life of an intangible asset as it is amortized each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization. An intangible asset that is subject to amortization must be reviewed for impairment by applying the recognition and measurement provisions of FAS Statement 121. An intangible asset that is subject to amortization shall be tested for impairment annually, or more frequently whenever events or changes in circumstances indicate that the asset might be impaired. Impairment is the condition that exists when the carrying amount of an intangible asset is not recoverable and exceeds its fair value. An impairment loss shall be recognized only if the carrying amount of an intangible asset is not recoverable and exceeds its fair value. The carrying amount of an intangible asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. That assessment shall be based on the carrying amount of the asset at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of an intangible asset exceeds its fair value. Herrera Partners has a thorough understanding of these standards. |
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