Goodwill & Intangible Impairment Testing
Goodwill and intangible assets often represent significant value on a company’s balance sheet, yet remain subject to impairment risk over time. At Synpact Consulting, we provide rigorous impairment testing services in accordance with IAS 36, ASC 350, and local GAAP frameworks. Our goal is to help you maintain accuracy, transparency, and confidence in your financials while meeting regulatory and audit requirements.
We combine valuation expertise, accounting knowledge, and industry insight to conduct defensible impairment analyses — from identifying impairment indicators to quantifying losses, sensitizing assumptions, and preparing disclosure support.
Why Choose Synpact for Impairment Testing
- Standards Proficiency: Strong command of IAS 36, ASC 350, and relevant local impairment rules.
- Audit‑Ready Reports: Full documentation, rationale, and reconciliations ready for auditor review.
- Deep Valuation Capability: Forecasting, discounting, and scenario analysis tailored to each intangible class.
- Indicator & Trigger Analysis: Continuous monitoring of impairment indicators (macro, industry, internal).
- Sensitivity & Scenario Testing: Robust stress-testing and alternate case analysis.
- Sector Experience: Across tech, pharma, consumer brands, industrial, financials.
- Transparent & Defensible Workflows: Clear methodology, incremental disclosure, and audit liaison.
Our Impairment Testing Service Offerings
Impairment Indicators & Triggers Review
Assessment of external indicators (market conditions, competitive changes).
Evaluation of internal triggers (underperformance, strategic shifts, cash flow declines).
Qualitative vs quantitative screening.
Valuation & Measurement of Recoverable Amount
Discounted cash flow (value-in-use) modeling.
Fair value less cost of disposal (FVLCD) approach.
Use of market multiples, transactions as checks.
Allocation Across Cash-Generating Units (CGUs)
Mapping goodwill and intangibles to reporting units.
Proportional allocation or full absorption as per standards.
Impairment Loss Calculation & Profit & Loss Impact
Compute impairment loss when carrying amount exceeds recoverable amount.
Allocate impairment first to goodwill, then to other assets.
Journal entries and profit/loss impact.
Sensitivity, Scenario & Reverse Tests
Perform sensitivity on discount rates, growth, margins.
Reverse‐trigger tests (in case assumptions improve).
Scenario analysis (base, optimistic, pessimistic).
Disclosure & Reporting Support
Required notes: assumptions, sensitivities, methods, key judgments.
Reconciliation of carrying amounts and impairment history.
Audit support & reviewer queries.
Impairment Testing Process
- Planning & Kickoff – Define scope, accounting standards, CGU mapping.
- Indicator Assessment – Screen for qualitative or quantitative triggers.
- Data Collection & Forecasting – Gather budgets, forecasts, historical performance.
- Modeling & Recoverable Amount – Build DCF / FVLCD models.
- Review & Sensitivity – Test assumption sensitivity and alternate cases.
- Impairment Recognition – Calculate loss, adjust carrying values.
- Disclosure & Reporting – Prepare footnotes, audit deliverables, board summary.
Industries & Use Cases
- Technology & Software
- Pharma / Biotech / Healthcare
- Consumer Brands / Retail
- Industrial / Manufacturing
- Media / Entertainment
Use Cases:
- Annual impairment testing in year‑end financials
- Interim impairment when triggering events occur
- Post‑acquisition impairment review
- Pre‑IPO audits or due diligence
- Restatement or retrospective impairment corrections
Frequently Asked Questions (FAQs)
Q: When do we need to test goodwill or intangible assets for impairment?
A: Impairment testing is required at least annually for goodwill and when impairment indicators are present for other intangibles.
Q: Which method is used to determine recoverable amount?
A: You use the higher of value-in-use (discounted future cash flows) or fair value less cost of disposal (FVLCD).
Q: What assumptions are most sensitive in impairment testing?
A: Discount rate (WACC), revenue growth, margin forecasts, terminal growth assumptions, and residual values.
Q: Can impairment be reversed?
A: Under IAS 36, impairment of goodwill cannot be reversed. For other assets, reversal may be possible. Under US GAAP (ASC 350), impairment of goodwill generally cannot be reversed.
Q: How detailed are your disclosures and auditor support?
A: We provide full detailed footnote disclosures, sensitivity tables, assumptions, maps, and support auditor queries.
Call to Action
Need expert impairment testing for goodwill or intangibles? Let Synpact Consulting deliver scientifically backed, audit‑ready impairment analyses tailored to your assets. Schedule a consultation or drop a line at info@synpactconsulting.com to get started.