This free, guided checker walks your finance team through the key decision points for ASC 360 Long-Lived Asset Impairment. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level US GAAP screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
Goodwill is tested under ASC 350-20 and indefinite-lived intangibles under ASC 350-30; ASC 360 covers long-lived assets held and used or held for sale.
The item is outside the ASC 360 impairment model, so apply the impairment guidance for that asset type, such as ASC 350-20 for goodwill or ASC 350-30 for indefinite-lived intangibles (ASC 360-10-15-4).
Official guidance: FASB Accounting Standards Codification
All six criteria must be met at the balance sheet date; a plan approved after period end does not change the current period classification.
The disposal group is held for sale and is measured at the lower of carrying amount or fair value less cost to sell under ASC 360-10-35-43, with depreciation ceasing.
Official guidance: FASB Accounting Standards Codification
A long-lived asset to be disposed of other than by sale (abandonment, an exchange for a similar productive asset, or a distribution to owners) continues to be classified as held and used until it is disposed of, and its remaining useful life is revised under ASC 360-10-35-47. An asset to be abandoned is not written off before it ceases to be used unless its remaining useful life shortens to the point that recoverability fails. A common misstep is treating a planned abandonment like a held-for-sale asset and applying fair value less cost to sell, which is not permitted for disposals other than by sale.
The asset is disposed of other than by sale, so it remains classified as held and used with a revised useful life until disposal under ASC 360-10-35-47.
Official guidance: FASB Accounting Standards Codification
Indicators include a significant adverse change in how the asset is used, physical damage, adverse legal or regulatory developments, construction cost overruns, and an expectation that the asset will be sold well before the end of its useful life.
No indicators of impairment are present, so a recoverability test is not required this period under ASC 360-10-35-21; continue normal depreciation and repeat the indicator review.
Official guidance: FASB Accounting Standards Codification
Group the asset at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, which is often a product line, facility, or store rather than a single machine (ASC 360-10-35-23). Project entity-specific cash flows over the remaining useful life of the primary asset of the group and use undiscounted amounts for the recoverability test. A common misstep is grouping too narrowly, which isolates a losing asset, or too broadly, which masks an impairment by pooling it with profitable operations.
Use the interactive tool above to see how this applies to your situation.
Official guidance: FASB Accounting Standards Codification
Group assets at the lowest level for which identifiable cash flows are largely independent (ASC 360-10-35-23) and project cash flows over the remaining useful life of the primary asset of the group.
Undiscounted cash flows equal or exceed the carrying amount, so the recoverability test passes and no impairment loss is recognized under ASC 360-10-35-17; revisit depreciation estimates under ASC 360-10-35-22.
Official guidance: FASB Accounting Standards Codification
Fair value reflects market participant assumptions under ASC 820; a discounted cash flow technique is common when quoted prices are not available.
Recognize an impairment loss for the excess of carrying amount over fair value under ASC 360-10-35-17, allocated to the asset group under ASC 360-10-35-28. Fair value equals or exceeds the carrying amount, so no impairment loss is measured even though the recoverability test failed (ASC 360-10-35-17); revisit depreciation estimates.
Official guidance: FASB Accounting Standards Codification
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