The third in a series of three “perspective papers” from the International Valuation Standards Council (IVSC) on the matter of goodwill amortization vs. impairment is expected to be released soon, according to Mark Zyla (Zyla Valuation Advisors). Zyla, who is chair of the IVSC Standards Review Board, spoke at the recent New York State Society of CPAs Business Valuation/Litigation Services Conference, which was held online on May 18. Accounting rule makers are pondering the idea of upending the current goodwill impairment model and reverting back to one of amortization. The first IVSC paper concluded that goodwill is not a wasting asset, and the second paper laid the groundwork for practical solutions to enhance the information value of the goodwill impairment test, and these solutions will be presented in the third paper.
Zyla updated the audience on other pending guidance:
- An exposure draft on the valuation of inventory has been issued, and the comment period runs until June 30, 2020;
- An exposure draft is in the works on issues related to valuation modeling;
- The IVSC Financial Instruments Board is revising standards related to financial instruments;
- The IVSC Tangible Asset Board is discussing long-term investing; and
- The impact of environmental, social, and governance (ESG) and the considerations on valuation is the subject of an analysis.