This introductory section covers key concepts relevant to the case and a brief overview of fair value accounting and impairment testing for United States Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS), including references.

Fair value is an estimate of “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” (FASB ASC 820, FASB 2009; IASB 2011). Fair value measurement standards provide guidance for estimating fair value. While there is substantial convergence of the two fair value measurement standards (EY 2021a, 1; PwC 2019, 9) for long-lived assets, there are differences relative to impairment testing.

The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) define a fair value hierarchy that categorizes fair value measurements into three levels. The hierarchy focuses on...

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