FASB OKs goodwill triggering standard update for private firms

BVWireIssue #221-3
February 17, 2021

goodwill, goodwill impairment, impairment testing, intangible

The Financial Accounting Standards Board has decided to give private companies and not for profits the option to assess at a later point a situation that might trigger a goodwill impairment. This change is designed to address the cost and complexity of having to perform triggering event evaluations and measure potential impairment in interim periods although they only prepare GAAP financial statements annually. FASB expects to publish the new standard in late March and entities that exercise this option don’t have to monitor for triggering events in between reporting periods. This is part of the FASB’s efforts to advise companies on how to account for the impact of the pandemic, and it has delayed implementation of certain rules. Separately, FASB is working on a new standard that will require companies to write down a portion of goodwill each year, instead of doing annual impairment testing.
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