Impairment testing is to be conducted at annual intervals. You may conduct the impairment test at any time of the year, provided that the test is conducted thereafter at the same time of the year. If the company is comprised of different reporting units, there is no need to test them all at the same time. It may be necessary to conduct more frequent impairment testing if there is an event that makes it more likely than not that the fair value of a reporting unit has been reduced below its carrying amount. Examples of triggering events are a lawsuit, the on-going pandemics catastrophe, restructuring reorganization, regulatory changes, the loss of key employees, and the expectation that a reporting unit will be sold.
The information used for an impairment test can be quite detailed. To improve the efficiency of the testing process, it is permissible to carry forward this information to the next year, as long as the following criteria have been met:
· There has been no significant change in the assets and liabilities comprising the reporting unit.
· There was a substantial excess of fair value over the carrying amount in the last impairment test.
· The likelihood of the fair value being less than the carrying amount is remote.