This excerpt taken from the MRVL 8-K filed Jan 13, 2006.
Impairment of Goodwill and Long-Lived Assets
Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, requires that goodwill and intangible assets that have indefinite lives not be amortized but rather be tested at least annually for impairment, or more frequently when events or changes in circumstances indicate that the asset might be impaired.
In accordance with the provisions of SFAS No. 142, the goodwill was tested for impairment as of April 3, 2005. The two-step impairment test defined in SFAS No. 142 was used to identify potential goodwill impairments and to measure the amount of any goodwill impairment loss to be recognized. During the first step of the impairment analysis, the fair value of the Business was compared to its net book value. It was determined that there was no impairment of goodwill since the estimated fair value of the Business exceeded its carrying value as of April 3, 2005.
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Recoverability of assets to be held and used is measured by the comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.