FASB proposes to extend private company alternatives on goodwill and intangible assets to NFPs

KPMG reports on the FASB's proposed amendments to ASC 350, ASC 805 and ASC 958. The proposed ASU would permit NFPs to elect to combine certain intangible assets with goodwill, and to amortize goodwill and test for its impairment only when a triggering event occurs.

Applicability

Proposed ASU on ASC 350, ASC 805 and ASC 958

• All not-for-profit entities, including those that are conduit bond obligors

Relevant dates

• December 20, 2018 – FASB issued proposed ASU
• February 18, 2019 – Comments due on proposed ASU

Key impacts

• An NFP would be permitted to elect to amortize goodwill on a straight-line basis over 10 years (unless a shorter useful life is more appropriate)  
• Under this election, an NFP would be required to test goodwill for impairment only when a triggering event occurs and would be permitted to test at either the entity level or the reporting unit level
• An NFP would be permitted to elect to not separately recognize intangible assets related to (1) certain customer-related intangible assets and (2) noncompetition agreements when applying purchase accounting and in certain other limited circumstances
• The alternatives are intended to (1) reduce the likelihood of impairments, (2) simplify the impairment test when it is required and (3) result in recognition of fewer intangible assets in future business combinations