This task helps prepare you to conduct efficient research, think critically, and provide effective communication in an accounting and auditing situation. FASB Topic $350$ Intangibles Goodwill and Other will be used for the research element of the task. Due to the number of updates to Topic $350$ over the years, you should utilize the FASB Accounting Standards Codification Database $($see Web Links section$)$ for your research. In part A you will research FASB Topic $350$ generally, based on the details provided in each subprompt. Then in part B you will apply your research based on the details in the Scenario and supporting document Goodwill Impairment Data.You are an auditor with a local CPA firm. You have been tasked with researching the treatment for goodwill impairment for AMMRC Incorporated $($AMMRC Inc.$),$ one of the firms clients. AMMRC Inc. purchased $100\%$ of two U$.$S$.$ corporations. AMMRC Inc. decided to complete quantitative impairment tests of goodwill for year$-$end December $31,2021.$ You will review the scenario and appendix, research the general process of assessing goodwill impairment from FASB Codification Topic $350,$ and appropriate subtopics, sections, and subsections. You will provide a decision path, justify your course of action, and calculate impairment loss $($if required$).$AMMRC Incorporated $($AMMRC Inc.$),$ is a U$.$S$.$ manufacturer of greenhouses. AMMRC Inc. sells the greenhouses online through its website.

On January $1,2016,$ AMMRC Inc. purchased $100\%$ of TLTJ $($TL$),$ a U$.$S$.$ corporation located throughout the U$.$S$.$ as well as DJJS Company $($DJ$),$ a U$.$S$.$ closely held corporation located on the West Coast. AMMRC Inc. originally recorded $$1,850,000$ of goodwill on its consolidated balance sheet, with $$1,300,000$ and $$550,000$ related to TL and DJ$,$ respectively.

The New Segment

TL manufactures polycarbonate sheets and panels. The sheets and panels have great transparency and are virtually unbreakable. The sheets and panels are used in construction of AMMRC Inc.$$s greenhouses and are sold through its website to other manufacturing companies and to individual consumers. DJ manufactures heavy$-$duty greenhouse shelves. A line of its shelves was modified to fit AMMRC Inc.$$s greenhouses. DJ also manufactures shelves that are sold to other manufacturing companies and to individual consumers.

Before purchasing DJ$,$ AMMRC Inc. purchased the shelves from a foreign company. AMMRC Inc. experienced unreliable vendor services and shipment of the product from the foreign company; the product usually arrived two or more weeks past the promised delivery date. Upon the purchase of TL and DJ$,$ AMMRC Inc. formally established a new segment, Greenhouse Parts and Accessories, for financial reporting purposes.

Goodwill

AMMRC Inc. developed a policy that requires all reporting units to formal quantitative impairment tests of goodwill every five years, beginning with the financial statements for fiscal year $2021.$ Prior to $2021,$ AMMRC Inc. concluded each year that a formal quantitative goodwill impairment test was not required.

AMMRC Inc. prepared to test all of it reporting units. In conjunction with these tests, AMMRC Inc. noted that several fixed$-$asset groupings within Greenhouse Parts and Accessories experienced significant declines in market value, and thus the segment personnel would be testing all fixed$-$asset groupings for impairment. AMMRC Inc. hired a large consulting firm that specialized in corporate valuation to conduct appraisals that are necessary for the goodwill impairment testing process. Its appraisal reports highlighted December $31,2021,$ fair values in the amounts of $$11,000,000$ and $$1,800,000$ for TL and DJ$,$ respectively. AMMRC Inc. is confident that all of the other assets and liabilities were reported at appropriate amounts that approximated fair values.

Additional information for impairment testing is found in the attached $$Goodwill Impairment Data.$$