How would a company determine whether goodwill has been impaired?

For purposes of the goodwill impairment test, all goodwill must be assigned to a reporting unit. Goodwill impairment for each reporting unit should be tested in a two-step process. In the first step, the fair value of a reporting unit is compared to the reporting units net carrying amount (goodwill included) at the date of the periodic review. The fair value of the unit may be based on quoted market prices, prices of comparable businesses, or a present value or other valuation techniques. If the fair value at the review date is less than the carrying amount, then the second step is necessary. In the second step, the carrying value of goodwill is compared to its implied fair value.