FASB Issues Alternative for Goodwill Impairment Test

Blog
April 7, 2021

The FASB issued ASU No. 2021-03 Intangibles—Goodwill and Other (Topic 350), Accounting Alternative for Evaluating Triggering Events, which provides private companies and not-for-profit entities an accounting alternative to test goodwill for impairment only at the end of the reporting period. Prior to ASU 2021-03, ASC 350-20 required monitoring and evaluation of goodwill triggering events throughout the reporting period. When a triggering event occurred, a triggering event analysis and a goodwill impairment test (comparison of fair value to carrying value) were required at that time. If adopted, ASU 2021-03 will no longer require monitoring of goodwill impairment triggering events during the reporting period and will instead require impairment to be considered, based on known facts and circumstances, as of the end of the reporting period.

ASU 2021-03 is effective on a prospective basis for fiscal years beginning after December 15, 2019.