What it is
The goodwill impairment test compares the fair value of each reporting unit with its carrying amount, including goodwill. If carrying amount is higher, the loss is the difference, limited to the goodwill in that unit. An entity can first apply a qualitative screen and skip the quantitative comparison when impairment is not more likely than not.
This workbook records the screen, runs the comparison for up to six reporting units, caps the loss at goodwill and flags zero or negative carrying amounts. A support tab ties goodwill to the ledger and reconciles the sum of unit values to an observable entity value, and an entry tab posts the loss.
When to use it
- At the annual test date and whenever a triggering event calls for an interim test.
- When documenting headroom by reporting unit for management and the auditor.
- When reconciling reporting unit fair values to market capitalization or a recent transaction.
What’s inside
- Six reporting units with goodwill, carrying amount, fair value and screen result
- Headroom, calculated loss limited to goodwill and a result for each unit
- Goodwill tie-out and entity value reconciliation
- Valuation assumptions log by reporting unit
- Impairment entry by unit
Standard cited
This template follows ASC 350. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
How is the goodwill impairment loss measured?
As the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the goodwill allocated to that unit. The workbook applies that cap in the loss column.
Can I skip the quantitative test?
Yes, if a qualitative assessment concludes it is not more likely than not that the fair value of the reporting unit is below its carrying amount. Select that result and the workbook records zero loss. The entity can also skip the screen and go straight to the quantitative comparison.
Why reconcile unit values to market capitalization?
The sum of reporting unit fair values, plus corporate items, should be explainable against an observable entity value. A large gap needs an explanation, such as a control premium, and the support tab shows the difference and its percentage.
What about tax-deductible goodwill?
The loss changes the deferred tax balance, and that changes the unit’s carrying amount. Compute the tax effect in the provision and iterate the carrying amount where it matters.
Related templates
- Intangible Assets Rollforward Workbook (ASC 350)
- Lead Schedule Template (Excel)
- Summary of Uncorrected Misstatements (AU-C 450)
- Disclosure Checklist: Fair Value Measurements (ASC 820)
Last updated 11/05/2026. All free templates.