A Deep Dive into the Discounted Cash Flow Valuation Model in Determining the Impairment of Goodwill: An Instructional Guide.

The accounting for goodwill impairment is generally covered in an intermediate or advanced accounting course; however, there is usually little or no attention paid to the valuation techniques and subjectivity of assumptions used in the measurement of the fair value of the reporting unit. In this paper, we attempt to explain the quantitative approach with a focus on the discounted cash flow (DCF) model used in determining the fair value of the reporting unit. We examined six most common variables used in the DCF model and how a slight change could result in a different outcome in valuing a reporting unit. [ABSTRACT FROM AUTHOR]