Defining Issues   |   January 2017

 

FASB simplifies goodwill impairment test

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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

ASU 2017-04

  • 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

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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

 

 

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