FASB proposes alternative to accounting for Goodwill and certain identifiable intangible assets for non-for-profits

January 3, 2018

Published: The Accountant

The Financial Accounting Standards Board (FASB) has issued a proposed Accounting Standards Update (ASU), which would reduce the cost and complexity of accounting for goodwill and measuring certain intangible assets for not-for-profit organisations.

Stakeholders have been encouraged to review and provide input on the proposed ASU by February 18 2019.

FASB’s chairman Russell G. Golden said: “Stakeholders subsequently told us that these two private company alternatives would also benefit not-for-profit organisations – as the benefits of current accounting for goodwill and identifiable intangible assets in a business combination did not justify the costs.

“This proposed standard simply extends the scope of the two private company alternatives to not-for-profits, which will enable them to recognize fewer items as separate intangible assets in acquisitions and to account for goodwill in a more cost-effective manner.”

The proposed ASU, instead of testing goodwill for impairment annually at the reporting unit level, a not-for-profit organisation that elects the accounting alternative would include: amortising goodwill over 10 years or less on a straight line basis, testing for impairment upon a triggering event, have the option to elect to test for impairment at the entity level, and have the option to subsume certain customer-related intangible assets and all non-compete agreements into goodwill.

http://www.theaccountant-online.com/News/fasb-proposes-alternative-to-accounting-for-goodwill-and-certain-identifiable-intangible-assets-for-non-for-profits-6920947

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