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Goodwill impairment test

Fair value for each reporting unit by discounted cash flow and guideline companies, set against carrying amount and reconciled to market capitalization. Every input tied to its source

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XLSXDOCX16 steps

The problem

Below book, MasterBrand cited its implied control premium and ran no interim test

With the stock below book, the reporting units' fair values, less debt and unallocated corporate costs, have to reach market capitalization with a control premium the auditors accept. Close the gap with a forecast the board never saw and it fails review: PCAOB inspectors keep finding impairment forecasts that differ from those used in budgeting. Forrester's share price fall brought an interim test and a $10.8 million charge this year

The request

Run Harrier's annual goodwill impairment test as of October 1, before the Q3 10-Q. We make residential building products: $1.6 billion revenue, Nasdaq listed, calendar year, three reporting units. Outdoor Living, bought in 2022 for $640 million, carries $410 million of goodwill and missed its 2026 plan. Value each unit by DCF on the FY27 budget and LRP the board saw, and guideline companies, weighted as last year. Give headroom and a WACC by terminal growth grid. We've traded below book since the July print, so reconcile to market cap with a premium the auditors accept, and settle whether the July drop was a trigger at September 30. Memo for the auditors and audit committee, with 10-Q wording. Files attached.
  • Harrier P&L and plan by unit Jan23 to Sep26.xlsx
  • Harrier FY27 budget and LRP.xlsx
  • Harrier balance sheet by unit Sep26.xlsx
  • Harrier debt and leases Sep26.xlsx
  • Harrier share price and shares outstanding Jan26 to Oct26.xlsx
  • Harrier analyst notes Jul26 to Sep26.pdf
  • Harrier goodwill test Oct25.pdf

How Axe works

ApprovedChanges asked
Your reviewApprove, or say what to change
Approved or changes
Impairment test and memoTest, memo and tie out report
Final reviewApprove the revised files
Revised impairment test and memoRevised files and tie out

What you get back

XLSXImpairment test workbookCarrying amounts, forecast, WACC, DCF, guideline companies, headroom, grids and market reconciliation
DOCXImpairment memoConclusion by unit, the July trigger, method, reconciliation, headroom and 10-Q wording
Tie out reportOpen items first, then each figure and citation marked tied or corrected

Make it yours

Set your house WACC conventions and premium evidence, change the reporting units or weights, or use your own memo template. Every step and every prompt can be edited

Customize this Agent

Opens a private copy of this Agent in your workspace, ready to adapt to your own sources

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