Goodwill Impairment

[Moderator 2]

I have a question regarding triggering events for a SFAS 142 analysis...I understand that a triggering event can include numerous items, such as if a company's stock price (for a publicly traded company) declines enough to bring market value of equity below book value. But how long can a company hold out to see if its stock price will increase and bring the market value of equity back to book value or higher? When does the company need to pull the trigger and have the analysis performed? Thanks for any input...

[Johnson]

The SEC touched on this issue in a Dec 2008 conference. For a discussion, visit PWC's web site: http://www.cfodirect.pwc.com/CFODire...de=AALN-7MG62R

[Alethea]

Interim Impairment Indicators

.55 FAS 142 requires companies to assess goodwill annually and upon the occurrence of a triggering event that leads management to believe it is more likely than not that an impairment exists. The SEC staff provided the following examples of potential triggering events in addition to those articulated in paragraph 28 of FAS 142:

•Impairment charges to other assets, or the establishment of valuation allowances for deferred tax assets
•Cash flow or operating losses at the reporting unit level (the greater the significance and duration of losses, the more likely it is that a triggering event has occurred)
•Current events or a negative long-term outlook for specific industries, with an impact on either the company as a whole or specific reporting units
•Not meeting analyst expectations or internal forecasts in consecutive periods, or downward adjustments of future forecasts
•Planned or announced plant closures, layoffs, or asset dispositions
•Market capitalization of the company below its book value