Last week, The Financial Accounting Standards Board (FASB) issued its proposed Accounting Standards Update 2012-12 on indefinite-lived intangible asset impairment testing. The new update, which is now open for public comment, “is intended to simplify impairment assessment and reduce the recurring costs” of compliance with existing standards “while improving the consistency of testing methods among long-lived asset categories for preparers,” the FASB explains in a news release:

“The amendments would allow an organization the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. An organization electing to perform a qualitative assessment no longer would be required to calculate the fair value of an indefinite-lived intangible asset unless the organization determines, based on a qualitative assessment, that it is ‘more likely than not’ that the asset’s fair value is less than its carrying amount.”  

Intangible assets such as indefinite-lived trademarks, licenses, and distribution rights, would be subject to the new standard, which would apply to all public, private, and not-for-profit organizations and would be effective for annual and interim impairment tests performed for fiscal years beginning after June 15, 2012, with the option for early adoption. Comments are due by April 24, 2012 to the exposure draft, which can be accessed here. During the comment period, “the Board will conduct additional outreach with preparers, users, and auditors of financial statements to solicit their input on the proposal,” the FASB says.