The FASB received almost 100 comment letters on its Invitation to Comment (ITC) on how to account for certain identifiable intangible assets acquired in a business combination. Should annual goodwill impairment tests be done away with for public companies? Should other assets be subsumed into goodwill? Should there be more disclosures about goodwill and intangible assets? These are just a few of the 29 questions that the ITC posed as the FASB revisits this issue. Comments were due October 7.

All over the map: The comment letters (all of which can be viewed if you click here) represent a broad range of respondents, with a disproportionate amount being corporates (in almost every sector), according to Chad Morrissey, a principal in PwC’s Deals Practice, who spoke on a recent podcast. Comments also came from accounting and valuation firms; societies (such as the ASA, AICPA, and RICS); consultants; individuals; and educational institutions. Interestingly, not a lot of comments were from the investor or user community, he notes. All of the respondents said they appreciated the chance to comment, and all agreed that it was necessary to revisit this issue, but that’s where the convergence ended. Responses to the issue of amortization versus impairment were “all across the board,” he says.

Members of the valuation profession have serious concerns over going back to a model that treats goodwill as a wasting asset. Here are some of the points they made in their comment letters:

• The concept of goodwill amortization leads to inaccurate accounting results and is not compatible with the premise of going concern inherent in the consideration paid to acquire nearly all businesses;
• For public entities, the benefits to users of financial statements of information provided by the current goodwill impairment model outweigh the costs (which are modest) of providing that information;
• There are valuable footnotes about assumptions made in the impairment test;
• Providing an option to test goodwill at the entity level would be a big mistake— good performance of the other parts of the acquired firm could conceal poor performance of the company;
• Some commenters oppose removing the requirements to assess goodwill for impairment at least annually, while others say the threshold for impairment testing should be upon a triggering event;
• Synergies that often appear in the goodwill allocation do not have finite lives—they continue into perpetuity; and
• Convergence with global standards (IFRS) is important; the IASB’s current majority views are that reverting to goodwill amortization would not provide significantly better information and that other intangibles should not be subsumed into goodwill.

What’s next? FASB will conduct a public roundtable discussion on November 15 in Norwalk, Conn. The meeting will be audio webcast and archived on the FASB website for 90 days. For details on how to attend in person, click here. You must register in advance, and seating is available on a first-come, first-served basis.