Goodwill	9 Months Ended
Sep. 30, 2012
Goodwill [Abstract]
Goodwill	8. GOODWILL: We assess our goodwill for impairment in the fourth quarter of each year, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In the third quarter of 2012, our stock market capitalization fell below our net book value for a period of more than 30 days, indicating that the value of our goodwill might be impaired. In evaluating whether goodwill was impaired, we compared the fair value of CyberOptics to its net book value or carrying value (Step 1 of the impairment test). In calculating fair value, we used the income approach. The income approach is a valuation technique under which we estimate future cash flows using financial forecasts. Future estimated cash flows are discounted to their present value to calculate fair value. When considering fair value, we also gave consideration to the control premium in excess of CyberOptics current share price that might be obtained from a third party acquirer. In the situation where net book value or carrying value exceeds fair value, the amount of impairment loss must be measured. The measurement of impairment (Step 2 of the impairment test) is calculated by determining the implied fair value of goodwill, which equals the excess of any remaining fair value over the fair values assigned to other assets and liabilities. Goodwill impairment is measured as the excess of the carrying amount of goodwill over its implied fair value. In determining fair value under the income approach, our expected cash flows are affected by various assumptions. Fair value on a discounted cash flow basis uses our business plan and projections as the basis for expected future cash flow forecasts, with an estimation of residual growth rates thereafter. We utilized a 20% discount rate and a 5% terminal growth rate for our 2011 goodwill impairment test. The significant assumptions incorporated in the cash flow forecasts used for our third quarter 2012 goodwill impairment test include a 15% discount rate and a 5% terminal growth rate. We believe the significant assumptions used in our 2012 goodwill impairment test are reflective of the assumptions currently used in the marketplace to evaluate fair value. Our recent analyses indicate that our goodwill at September 30, 2012 in the amount of $569,000 is not impaired.

8. GOODWILL:

We assess our goodwill for impairment in the fourth quarter of each year, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In the third quarter of 2012, our stock market capitalization fell below our net book value for a period of more than 30 days, indicating that the value of our goodwill might be impaired.

In evaluating whether goodwill was impaired, we compared the fair value of CyberOptics to its net book value or carrying value (Step 1 of the impairment test). In calculating fair value, we used the income approach. The income approach is a valuation technique under which we estimate future cash flows using financial forecasts. Future estimated cash flows are discounted to their present value to calculate fair value. When considering fair value, we also gave consideration to the control premium in excess of CyberOptics current share price that might be obtained from a third party acquirer. In the situation where net book value or carrying value exceeds fair value, the amount of impairment loss must be measured. The measurement of impairment (Step 2 of the impairment test) is calculated by determining the implied fair value of goodwill, which equals the excess of any remaining fair value over the fair values assigned to other assets and liabilities. Goodwill impairment is measured as the excess of the carrying amount of goodwill over its implied fair value.

In determining fair value under the income approach, our expected cash flows are affected by various assumptions. Fair value on a discounted cash flow basis uses our business plan and projections as the basis for expected future cash flow forecasts, with an estimation of residual growth rates thereafter. We utilized a 20% discount rate and a 5% terminal growth rate for our 2011 goodwill impairment test. The significant assumptions incorporated in the cash flow forecasts used for our third quarter 2012 goodwill impairment test include a 15% discount rate and a 5% terminal growth rate. We believe the significant assumptions used in our 2012 goodwill impairment test are reflective of the assumptions currently used in the marketplace to evaluate fair value. Our recent analyses indicate that our goodwill at September 30, 2012 in the amount of $569,000 is not impaired.