At its most recent meeting, the Financial Accounting Standards Board (FASB) discussed how to resolve the inconsistency between the useful life estimated for amortization purposes pursuant to SFAS 142, Goodwill and Other Intangible Assets, and the periods of cash flows used in determining the fair value of an intangible asset. Among other decisions, the Board removed the concept of “material modification” in favor of using periods of undiscounted cash flows (adjusted for certain entity-specific factors). The Board also amended SFAS 142 to allow an entity to select an amortization pattern that best reflects the economic benefits of the intangible asset; if that pattern cannot be reliably determined then a straight-line amortization method may be used.
A complete update on SFAS 142 is available here. For its next meeting this quarter, the Board is planning to draft alternatives for renewal costs, method of amortization, disclosures, transition and effective date.
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