10-K FY 2022 FINAL MOOG Inc - Flipbook - Page 49
Table of Contents
Allowance for Credit Losses: The allowance for credit losses is based on our assessment of the collectibility of
customer accounts. The allowance is determined by considering factors such as historical experience, credit quality,
age of the accounts receivable, current economic conditions and reasonable forecasted financial information that may
affect a customer’s ability to pay.
Inventories: Inventories are stated at the lower of cost or net realizable value with cost determined primarily on the
first-in, first-out (FIFO) method of valuation.
Property, Plant and Equipment: Property, plant and equipment are stated at cost. Plant and equipment are
depreciated principally using the straight-line method over the estimated useful lives of the assets, generally ranging
from 15 to 40 years for buildings and improvements, 5 to 15 years for machinery and equipment and 3 to 10 years for
computer equipment and software. Leasehold improvements are amortized on a straight-line basis over the term of
the lease or the estimated useful life of the asset, whichever is shorter.
Goodwill: We test goodwill for impairment at the reporting unit level on an annual basis or more frequently if an event
occurs or circumstances change that indicate that the fair value of a reporting unit is likely to be below its carrying
amount. We also test goodwill for impairment when there is a change in reporting units.
We may elect to perform a qualitative assessment that considers economic, industry and company-specific factors for
all or selected reporting units. If, after completing this assessment, it is determined that it is more likely than not that
the fair value of a reporting unit is less than its carrying value, we proceed to a quantitative test. We may also elect to
perform a quantitative test instead of a qualitative assessment for any or all of our reporting units. We performed a
qualitative test for all reporting units in 2021 and 2020.
Quantitative testing requires a comparison of the fair value of each reporting unit to its carrying value. We typically use
the discounted cash flow method to estimate the fair value of our reporting units. The discounted cash flow method
incorporates various assumptions, the most significant being projected revenue growth rates, operating margins and
cash flows, the terminal growth rate and the weighted-average cost of capital. If the carrying value of the reporting unit
exceeds its fair value, goodwill is considered impaired and any loss must be measured. To determine the amount of
the impairment loss, the implied fair value of goodwill is determined by assigning a fair value to all of the reporting
unit's assets and liabilities, including any unrecognized intangible assets, as if the reporting unit had been acquired in
a business combination at fair value. If the carrying amount of the reporting unit goodwill exceeds the implied fair
value of that goodwill, an impairment loss would be recognized in an amount equal to that excess. We performed a
quantitative test for all reporting units in 2022.
There were no goodwill impairment charges recorded in 2022, 2021 or 2020.
Acquired Intangible Assets: Acquired identifiable intangible assets are recorded at cost and are amortized over their
estimated useful lives.
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