Due to the time consuming, difficult, and often costly analysis involved in testing goodwill impairment of a triggering event, FASB has issued a new standard to provide an alternative evaluation for private and not-for-profit (NFP) companies.
Private and NFP companies can now elect to perform a goodwill trigger event assessment at the end of the reporting period. For example, a company may only prepare GAAP financials for an audit as of 12/31. The company can now elect to evaluate goodwill for impairment at 12/31 rather than throughout the year.
Here are other key guidelines for adopting this ASU:
- This ASU can be adopted for 12/31/20 financial statements if they have not yet been issued or made available for issuance as of 3/30/21.
- Any entity that reports GAAP financial statements at an interim date is not allowed to delay evaluating goodwill impairment triggering events to the annual reporting date and must evaluate at the interim date.
- This ASU only applies to goodwill impairment and does not include impairment testing of other assets and other intangibles.
Contact a K·Coe advisor with questions regarding this FASB issuance.