Excess consideration over fair value

When the cost of the assets is greater than the fair value, the excess cost is allocated to the nonfinancial assets acquired. This causes each acquired asset to be recognized at an amount greater than its individual fair value. No excess cost is allocated to financial assets or indefinite-lived intangibles because that would result in an immediate impairment loss for those assets. Indefinite-lived intangibles should be measured at their fair value since they are subject to the impairment testing under ASC 350. Long-lived assets are allocated the excess cost and recorded above their fair value because those assets are subject to impairment under ASC 360. Under ASC 360, long lived assets are first tested for recoverability based on future undiscounted cash flows at the asset grouping level. This makes it unlikely that a recently acquired asset group would fail the recoverability test that would cause an immediate impairment.