Private companies and not-for-profit entities (NFPs), including NFPs that are conduit bond obligors, that only report goodwill (or accounts impacted by goodwill impairment) on an annual basis.
December 21, 2020 – Proposed ASU issued
January 20, 2021 – Comments due on proposed ASU
Would provide an accounting alternative for eligible entities to perform a goodwill trigging event assessment only as of the annual financial reporting date instead of throughout the year.
Would allow adoption through an unconditional one-time election after the effective date without the requirement to assess preferability under ASC 250 (accounting changes and error corrections).
Would not require an entity to elect the goodwill amortization accounting alternative to qualify for this accounting alternative.
Would require entities that elect the alternative but later become ineligible (e.g. after an IPO) to reverse the effects of the accounting alternative. The consequences may include assessing triggering events during interim periods, without using hindsight, to determine if goodwill was impaired.
Would not affect the assessments for public companies and private companies that report on an interim basis, however the FASB is soliciting feedback from stakeholders about whether to expand this guidance to public and non-public companies in interim reporting periods.
Would not affect triggering events for impairment of other assets (e.g. long-lived assets), however the FASB is soliciting feedback from stakeholders about whether to expand this guidance to other areas.
Effective date would be for annual reporting periods beginning after December 15, 2019 with early adoption permitted for financial statements that have not been issued or made available for issuance.