FASB’s New Qualitative Goodwill Impairment Assessment
Implications and opportunities
Complying with the requirement for annual goodwill impairment testing can be time-consuming and expensive for companies, especially private organizations. Recently, preparers of private companies’ financial statements have been striving for a less costly and complex solution. In response to their efforts, the Financial Accounting Standards Board (FASB) proposed, issued, and recently finalized Accounting Standards Update (ASU) No. 2011–08 to the existing requirement, which introduced an optional qualitative impairment assessment.
This article provides an overview of the current impairment testing requirement; the introduction of the qualitative assessment and evaluation process; the potential costs and savings associated with a qualitative assessment; and possible road bumps in its adoption and application.