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Goodwill Under Scrutiny: How the SEC Is Increasingly Targeting Goodwill Impairments and Ways to Reduce Risk  

Author:  Jason H. Smith.

Source: Volume 52, Number 18, October 15 2019 , pp.221-225(5)

Review of Securities & Commodities Regulation

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Following nearly a decade of strong M&A activity, companies’ balance sheets reflect historic levels of goodwill. This increase has led to an accompanying uptick in goodwill impairments, in both rate and size, as goodwill becomes a larger share of companies’ total assets. The SEC’s Division of Enforcement is increasingly wading into this technically complex and judgment-laden area, and is scrutinizing how, when, and why companies record changes to the value of their goodwill and intangible assets. Companies should monitor these developments and assess their own accounting practices to better understand where key risks lie.

Keywords: Failure-To-Impair Investigations; In the Matter of PowerSecure International, Inc.

Affiliations:  1: Gibson, Dunn & Crutcher.

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