In part I, we outlined the order of impairment testing for assets held and used. Application of testing is as follows:
1. Quantitative test: ASC 350 indefinite-lived assets other than goodwill
- Determine the fair value of the indefinite-lived asset at the measurement date.
- Best practice: Use the same valuation methodology used in the initial recognition of the asset, if appropriate (e.g. relief-from-royalty valuation method used for trade name/trademark valuation at the acquisition date and subsequently for impairment testing).
- If the FV is less than carrying value, record an impairment charge to write down the asset’s carrying value to FV.