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FASB ASC AND IASB RESEARCH CASE

1. IAS 36 specifically prohibits the reversal of impairment losses goodwill. Under US GAAP,
the reversal of previously recognized impairment losses
is prohibited for long-lived assets (including definite-lived intangibles) to be
held and used, as well as an impairment recorded for indefinite lived intangibles
and goodwill. Retrieved:

http://www.ey.com/Publication/vwLUAssets/Impairment_accounting_the_basics_of_IAS_36_Impairm
ent_of_Assets/$FILE/Impairment_accounting_IAS_36.pdf

2. U.S. GAAP uses a two-step approach. (Step 1) and the carrying value amount
of goodwill is greater than its implied fair value. (Step 2) When the carrying amount
of a reporting unit is zero or negative an impairment loss is recognized when a
qualitative assessment indicated that it is more likely than not that a goodwill
impairment exists and the carrying amount of goodwill is greater than its its implied
fair value. Prior to performing Step1, entities may elect to perform a qualitative assessment
of whether it is more likely than not that the carrying amount of a reporting unit exceeds its
fair value. If the qualitative assessment indicates that it is more likely than not that the
carrying amount of a reporting unit exceeds its fair value, then Step 1 must be performed.
If the opposite is true, the impairment test is complete

IFRS has a one-step approach that compares the carrying amount of a CGU (including
Goodwill) to its recoverable amount. When the carrying amount of a CGU is greater than
its recoverable amount, an impairment loss is recognized. The recoverable amount is
the greater of; (a) the fair value less cost to sell and (b) the value in use (i.e., the present
value of future cash flows expected to be delivered from the CGU.

The impairment loss it the amount by which the carrying amount of CGU (including goodwill)
exceeds its recoverable amount. That loss is then allocated first to goodwill, until goodwill is
reduced to zero. The carrying amount of other assets in the CGU are then reduced, on a
pro-rata basis (subject to certain expectations. Retrieved:

http://mcgladrey.com/content/dam/mcgladrey/pdf/ifrs_impairment_of_long_lived_assets.pdf
2012 McGladrey LLP. All Rights Reserved.

Impairment of goodwill
Goodwill should be tested for impairment annually. [IAS 36.96]
To test for impairment, goodwill must be allocated to each of the acquirer's cash-generating units, or
groups of cash-generating units, that are expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups
of units. Each unit or group of units to which the goodwill is so allocated shall: [IAS 36.80]
represent the lowest level within the entity at which the goodwill is monitored for internal
management purposes; and
not be larger than an operating segment determined in accordance with IFRS 8 Operating
Segments.
A cash-generating unit to which goodwill has been allocated shall be tested for impairment at least
annually by comparing the carrying amount of the unit, including the goodwill, with the recoverable
amount of the unit: [IAS 36.90]
If the recoverable amount of the unit exceeds the carrying amount of the unit, the unit and the
goodwill allocated to that unit is not impaired
If the carrying amount of the unit exceeds the recoverable amount of the unit, the entity must
recognize an impairment loss.
The impairment loss is allocated to reduce the carrying amount of the assets of the unit (group of
units) in the following order: [IAS 36.104]
first, reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of
units); and
then, reduce the carrying amounts of the other assets of the unit (group of units) pro rata on
the basis.
The carrying amount of an asset should not be reduced below the highest of: [IAS 36.105]
its fair value less costs of disposal (if measurable)
its value in use (if measurable)
zero.
Retrieved: http://www.iasplus.com/en/standards/ias/ias36