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AMC has released on June 3rd a preliminary report of their Q1 for 2020. In that report they outline:

Net Loss for the first quarter of 2020 to be between $2,117.3 million and $2,417.3 million, based on
an **impairment charge** related to estimated long lived assets, indefinite-lived intangible assets and
goodwill of $1,800.0 million to $2,100.0 million, compared to a net loss of $130.2 million for the
three months ended March 31, 2019.

Adjusted Net Loss for the first quarter of 2020 to be $224.5 million compared to $101.8 million in
the same period a year ago. Adjusted Net Loss normalizes results for the impact of fair-value
remeasurement of the derivative liability and derivative asset related to the Company’s Convertible
Notes due 2024 and the impact related to the **impairment of long lived assets, indefinite-lived
intangible assets and goodwill** and removes the income tax impact of the Spain and Germany
valuation allowance.

I understand goodwill as the difference between a certain asset value and the price actual price paid for it. Like in an acquisition of another company for a certain markup. But I do not understand AMC's ability to report a loss of 1.8 to 2.1 billion USD because of "impairment charge related to estimated long lived assets, indefinite-lived intangible assets and goodwill of $1,800.0 million to $2,100.0 million"

What does that mean? Is that related to losses due to COVID19? Or something else? How does this impact their balance sheet?

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Impairment is a loss taken against an asset that has reduced in value permanently. Goodwill has to be tested at each reporting cycle to determine whether or not an impairment loss should be taken but it is also the case of other assets. This may or may not be related to covid. You may want to look at the MD&A and the notes to the financial statements for more info on that.

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    How and when is it getting tested? Who audits it? What would need the affect of reporting earnings with or without this 1.8 billion loss?
    – KingsInnerSoul
    Jun 9 '20 at 3:46
  • How and when: as I said, at each reporting period. Who audits: typically an external auditor (e.g. KPMG, EY, Deloitte, PwC, ...). Don't understand the last question. If you are asking what is the purpose of impairment on earnings, it depends on your interpretation. Impairment is usually a durable decrease of future potential cash flows out of a specific asset. This may or may not impact future earnings negatively, mostly.
    – ApplePie
    Jun 9 '20 at 16:57

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