Project Update

Goodwill Impairment Assessments

Last updated on September 16, 2011

(Updated sections are indicated with an asterisk *)


Project Objective
*Due Process Documents
*Decisions Reached at the Last Meeting
*Summary of Decisions Reached to Date
*Next Steps
Board/Other Public Meeting Dates
Background Information
Contact Information


Project Objective

The objective of the Goodwill Impairment Assessments project is to simplify how an entity is required to test goodwill for impairment under Topic 350, Intangibles-Goodwill and Others.

*Due Process Documents

On September 15, 2011, the Board completed this project with the issuance of Accounting Standards Update No. 2011-08 Intangibles–Goodwill and Other (Topic 350): Testing Goodwill for Impairment.

*Decisions Reached at the Last Meeting

Please see Board meeting minutes below.

*Summary of Decisions Reached to Date (as of September 15, 2011)

Please see Accounting Standards Update No. 2011-08.

*Next Steps

None.

Board/Other Public Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions became final only after the formal written ballot to issue a final standard.

August 10, 2011 FASB Board Meeting—Workshops
June 29, 2011 FASB Board Meeting—Comment Letter Summary
March 14, 2011 FASB Board Meeting—Extended outreach and next steps
February 9, 2011 FASB Board Meeting—Alternatives
February 3, 2011 FASB Board Meeting—Outreach and Alternatives
December 8, 2010 FASB Board Meeting—Agenda Decision

Background Information

Current guidance under Topic 350, Intangibles-Goodwill and Other, requires a reporting entity to first assess goodwill for impairment by comparing the fair value of a reporting unit to its carrying amount, including goodwill. If the reporting entity’s fair value is less than its carrying amount, the second step of the impairment test must be performed in order to measure the amount of the goodwill impairment, if any. Among other recommendations, the Board received input from preparers of private company financial statements during its private company issue roundtables held during October and November of 2010 and through other forums suggesting that the Board explore alternatives as to how nonpublic entities should assess goodwill for potential impairment. The Board also received a comment letter from the Private Company Financial Reporting Committee (PCFRC) addressing EITF Issue 10-A, When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts, which also recommended that the Board consider alternatives to the manner in which Step 1 of the goodwill impairment test is required to be performed. The PCFRC also raised concerns regarding the impact of the requirements of Issue 10-A given the capital structure of some privately held companies. Many preparers of nonpublic entity financial statements indicate that the current requirement for performing Step 1 is overly burdensome due to the relative amount of preparation efforts and costs, and that the costs incurred outweigh the benefits to their users. As a result of these concerns, they recommended that the Board consider a qualitative approach or other alternative approaches for assessing goodwill for potential impairment.

Contact Information

Kevin Catalano
Practice Fellow
kpcatalano@fasb.org

Peter Gustafsson
Postgraduate Technical Assistant
pgustafsson@fasb.org