How will FASB’s new intangibles initiative impact BV analysts? According to Brad Pursel (Brown Smith Wallace LLC):
Under GAAP, impairment testing of non-goodwill indefinite-lived intangible assets is a one-step test similar to step one of goodwill impairment testing (i.e., compare fair value to carrying value). Given FASB’s recent approval of a qualitative option for step one of goodwill impairment testing, it appears that a likely outcome of the FASB’s new project will be a qualitative option for testing indefinite-lived intangible assets for impairment.
Due to the relative comparability between testing indefinite-lived intangible assets and goodwill for impairment, it may not take long for this new FASB project to result in a proposed Accounting Standards Update for public comment. However, since indefinite-lived intangible assets can include varied assets, from brands to in-process research and development, it is possible that the FASB could develop asset-specific guidance. For example, under a qualitative option of impairment testing, testing a brand for impairment could vary considerably from the factors considered to test an in-process R&D asset for impairment.