Defining Issues | January 2017
FASB simplifies goodwill impairment test
KPMG reports on FASB’s ASU 2017-04 related to ASC 350. FASB ASU eliminates Step 2 of the goodwill impairment test and replaces the qualitative assessment.
Applicability
- Company with goodwill on its balance sheet
Relevant dates
Mandatory effective dates and early adoption provisions:
Effective date:
Prospectively for annual and interim periods in fiscal years beginning after
Public business entities (SEC filer)
Dec. 15, 2019
Public business entities (non-SEC filer)
Dec. 15, 2020
All other entities
Dec. 15, 2021
Early adoption allowed? Yes, for goodwill impairment tests with measurement dates after January 1, 2017
Key impacts
- Single-step test identifies and measures impairment of goodwill
- Entities disclose the amount of goodwill allocated to each reporting unit with zero or negative carrying amounts and the related reportable segment
Podcast
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Report contents
- Key facts and impacts
- Example: how to apply the ASU to non-deductible goodwill
- Example: how to apply the ASU to deductible goodwill
- Effective dates and transition
Related content
Defining issues: Important clarification about the effective date for goodwill impairment simplification