May 26, 2016

Accounting for Goodwill to Change

By Linda Marie Pearson, CPA, CFE
Does your entity have goodwill on its balance sheet? If so, a change simplifying the accounting for goodwill impairment proposed by the Financial Accounting Standards Board (FASB) may affect your entity.
The Financial Accounting Standards Board (FASB) is proposing changes to accounting requirements for goodwill.  With its release of the Exposure Draft Intangibles – Goodwill and Other (Topic 350), FASB is proposing simplifying the accounting for goodwill impairment.
Currently, the standards include a step which includes determining the implied fair value of goodwill and comparing it with the carrying amount of that goodwill.  In computing the implied fair value of goodwill, the entity must perform procedures to determine the fair value at the impairment testing date of its assets and liabilities.
The proposal would remove the step. Instead, an entity would perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.
For more information on this proposal, click the following link
Comment deadline is July 11, 2016.
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