In 2007 Sprint Nextel Corporation reported a large goodwill impairment loss. Referring to Sprint Nextel’s 2007 financial statements and applicable financial reporting standards, answer the following questions:
1. How much goodwill impairment charge did Sprint Nextel report in 2007?
2. Why did Sprint Nextel write down their goodwill in 2007? What are some other indicators for goodwill impairment in general?
3. How did Sprint Nextel reflect this impairment in financial statements?
4. How often does Sprint Nextel test its goodwill for impairment and what are the testing steps?
5. Certain other indefinite-lived intangibles and other long-lived assets (including intangible assets with a finite life) are also subject to impairment assessment. Did Sprint Nextel incur any of these impairment charges in 2007? Explain briefly when and how Sprint Nextel tests these assets for impairment.
6. Is impairment of goodwill and other intangible assets reversible under U.S. GAAP? How about under IFRS? (Refer to FASB Topic 350 Intangibles—Goodwill and Other, and IAS 36 Impairment of Assets)
7. Is goodwill impaired in the same way under IFRS? Does IFRS also employ a two-step approach for goodwill impairment testing? If not, how is goodwill tested for impairment under IFRS? (Refer to IAS 36 Impairment of Assets.)