In 2018, CVS Health Corporation reported a $6.1 billion charge for the impairment of goodwill in one of its reporting units (segments) in its 10-K annual report. Referring to CVS Health’s 2018 financial statements and any other information from the media, address the following:
1. CVS Health’s segments serve as its reporting units for assessing goodwill for potential impairments. Which segment suffered a 2018 impairment? Describe the revenue model for this segment.
2. What were the underlying business reasons that required CVS Health to record a goodwill impairment in 2018?
3. How did CVS Health reflect the 2018 goodwill impairment in its income statement and cash flow statement?
4. Describe in your own words the goodwill impairment testing steps performed by CVS Health in 2018 and the consequent loss measurement.
