Notable results from annual US goodwill impairment study.

Author:Roland, Gary
Position::Research - Report - Statistical data
 
FREE EXCERPT

he 2013 U.S. Goodwill Impairment Study includes some notable findings. Approximately $51 billion of goodwill impairments were recorded by U.S. public companies in calendar year 2012, representing a 76 percent increase from $29 billion in 2011. The 2012 aggregate impairment is the highest amount since the level reported at the height of the financial crisis in 2008.

The total goodwill impairment amount of $5 I billion is based on the company base set selection and methodology used to prepare the study. It provides a consistent basis for comparison of goodwill impairments over the study period. In addition, General Motors Co.'s $27 billion goodwill impairment charge in the fourth quarter was excluded clue to the unique circumstances related to the initial recording and subsequent impairment of its goodwill.

The 2013 study also provides summary highlights of the recently released AICPA Accounting and Valuation Guide Testing Goodwill for Impairment, which is available at www.cpa2biz.com.

History of the Studies

Duff & Phelps and FERF first published the results of their Goodwill Impairment Study in 2009. This inaugural study examined U.S. publicly traded companies' recognition of goodwill impairment at the height of the financial crisis (the end of 2008 and the beginning of 2009), as well as the findings of a survey of Financial Executives International (FEl) members. The 2010 Goodwill Impairment r Study expanded the time horizon over which goodwill impairments were studied to five years and modified the dataset to enable a more in-depth assessment of goodwill impairment trends over time. Industry Spotlights were introduced in 2012 along with cross-tabulation analyses.

Now in its fifth year of publication, the 2013 study continues to examine general and industry goodwill impairment trends observed through December 2012 and report the 2013 results of the annual goodwill impairment survey of FEl members.

The manner in which this information is presented has evolved over time and the 2013 study adds two new tables that bridge industry trends along with other summary data. The graphic on page 54 captures the evolution of goodwill in the study from 2008 through 2012 to aid in assessing goodwill and goodwill impairment trends over time. Mergers and acquisitions (M&A) activity summarizes the transactions (both number of deals and value) to acquire a 50 percent or more controlling interest.

2013 Study Highlights Among the general trends for 2012:

* U.S. companies in the study recorded $51 billion of goodwill impairment, a 76 percent increase from $29 billion in 201 I. This marks the highest aggregate impairment amount since the level reported in 2008, at the height of the financial crisis.

* Goodwill impairments were...

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