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Tax rules, market changes may stretch goodwill testing

Tammy Whitehouse | November 13, 2018

Big changes in market conditions and tax rules could drive some added rigor into the annual year-end test of goodwill sitting on corporate balance sheets.

Valuation and advisory firm Mercer is telling companies to start early and prepare for more questions from auditors about their conclusions regarding goodwill, which is an intangible asset on the balance sheet resulting from business combinations, like an acquisition. Although impairments, or writedowns, of goodwill smoothed out in recent years as the economy improved, changing conditions and mixed indicators suggest companies will have to give it more thought and scrutiny this year.

Under Accounting Standards Codification Topic 350, companies are required to test the value...

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