SEC flags Kraft Heinz (KHC) impairment disclosure - should investors expect more impairment charges?

The Securities and Exchange Commission (SEC) issued a comment letter to Kraft Heinz (KHC) on October 24, 2023, inquiring whether a decline in Kraft Heinz’s market capitalization and stock price should have triggered interim goodwill and intangibles impairment testing for the six months ended July 1, 2023.

Let's delve into Kraft Heinz's goodwill and intangible assets disclosure to comprehend the significance of the SEC's scrutiny and the comment letter. As of September 30, 2023, the company held $89.65 billion in total assets, with approximately 76% ($68.6 billion) represented by goodwill and indefinite-life intangibles, primarily trademarks. A high percentage of goodwill and intangibles was likely one of the considerations that led the SEC to request more clarity around the impairment testing.

In contrast to definite-life intangible assets, which are depreciated, goodwill and indefinite-life inta…