COVID-19 business disruptions may prompt you to assess for potential asset impairments. But asset impairment assessments are rarely straightforward.
In turbulent times, you need clearer insights into the health of your nonfinancial assets, for which market values may have decreased dramatically.
Determining if an asset is impaired – and when and how to record a loss – requires your best analysis and judgment. You must make decisions about triggering events, impairment testing, documentation, and disclosures.
It isn’t easy, and there's no one-size-fits-all approach. Accounting models and U.S. GAAP guidance can vary depending on the asset type: inventory; goodwill; intangibles; or property, plant, and equipment (PP&E). Guidance is evolving, and ongoing market uncertainty makes forecasting more difficult.
Asset impairment accounting takes on greater importance during economic upheaval or recession.
It also requires more work and attention to detail – tracking down data and assembling thorough documentation.
But the effort has a payoff. Your ability to evaluate your assets and their cash flows will have a tremendous impact on the quality of your financial reporting and the business decisions that follow.
Our advisers bring deep experience with impairment assessments for every type of nonfinancial asset class: inventory, intangible assets, PP&E, and goodwill.
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We bring a meticulous and individualized approach to asset impairment accounting for each client. Our specialists will help you understand the impairment considerations for each of your asset classes and share guidance on the proper ordering of impairment testing, what triggering events should lead to impairment testing, and how to calculate impairment, if needed.
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