Company: PAVS
Filing Date: 2025-08-04
Form Type: 20-F
Source: 0001929980-25-000590
Chunk: 97

Company: Paranovus Entertainment Technology Ltd.
Filing Date: 2025-08-04
Form: 20-F
Item: Item 5
Chunk 97
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. In accordance with the FASB ASC 350 guidance on “ Testing of Goodwill for Impairment”, a company first has the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the company decides, as a result of its qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is mandatory. Otherwise, no further testing is required. The quantitative impairment test consists of a comparison of the fair value of each reporting unit with its carrying amount, including goodwill. If the carrying amount of each reporting unit exceeds its fair value, an impairment loss equal to the difference between the fair value of the reporting unit and the carrying amount will be recorded. Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. The judgment in estimating the fair value of reporting units includes estimating future cash flows, determining appropriate discount rates and making other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit.

As of March 31, 2025, goodwill resulting from business acquisitions has two reporting units, including BW and 2Lab3. The Company evaluates whether there are indicators of goodwill impairment on quarterly basis and performs the annual goodwill impairment assessment as of March 31. As of March 31, 2025, the Company qualitatively assessed relevant events and circumstances, including macroeconomics conditions, industry and market considerations, its overall financial performance, and concluded by weighing all these factors in their entirety that it was more likely than not the fair value of the Company’s reporting unit was lower than its respective carrying value.

Impairment of Long-lived Assets other than goodwill

The Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. The Company recorded impairment of intangible asset amounted to $1,108,333 as of March 31, 2025 and there were no impairments of these assets as of March 31, 2024.

Discontinued operations