FASB approves private company and NFP goodwill triggering event alternative
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FASB responded to an urgent pandemic-related accounting concern Wednesday by voting to provide private companies and not-for-profits with an alternative to the requirement to monitor and evaluate goodwill impairment triggering events throughout the fiscal year and potentially measure a goodwill impairment at the date of triggering events.

FASB voted Wednesday to provide an accounting alternative allowing private companies and not-for-profits to perform the goodwill impairment triggering event assessment at the reporting date any time they report financial information, including interim reports.

That’s an expansion of the scope described in Proposed Accounting Standards Update, Intangibles — Goodwill and Other (Topic 350): Accounting Alternative for Evaluating Triggering Events (that was issued in December 2020), which was limited to private companies and not-for-profits that report goodwill only on an annual basis. Many commenters, including the AICPA Private Companies Practice Section Technical Issues Committee (TIC), had urged expanding the scope of the alternative so that it could be used by more private companies and not-for-profits.

TIC said that under the previously proposed scope, “very few private companies and NFPs would be eligible to apply this alternative as drafted.”

In addition to expanding the scope, FASB affirmed the following decisions:

“Knowing that there has been an impairment is a lot more meaningful than knowing the exact date when it occurred,” FASB member Marsha Hunt said during the board meeting. “… I think that, overall, we’re coming up with a position that allows private companies to perform the calculations that are meaningful and to publish balance sheets on their reporting dates that will be useful.”

FASB instructed its staff to prepare a final standard that will be put to a written vote at an upcoming board meeting.

The board has a separate goodwill project that will seek much broader improvements to subsequent accounting for goodwill and intangible assets for all entities (including public companies). At its Dec. 16, 2020, meeting the board tentatively decided that: