Overview

In November 2023, the Private Enterprise Advisory Committee provided the Accounting Standards Board (AcSB) with feedback arising from challengers related to the subsequent measurement of goodwill and the recognition of intangible assets acquired in business combinations. The challenges relate to the cost and complexity of goodwill impairment tests. More specifically, the feedback mentioned the cost and complexity of:

• Estimating the fair value of certain intangible assets acquired in a business combination.
• Carrying out the goodwill impairment testing.

In addition, the feedback specified that goodwill often lacks information usefulness for financial statement users such as creditors and lenders, as banks typically do not factor goodwill into their lending decisions.

Considering the feedback raised above, the Private Enterprise Advisory Committee proposed the following:

• A relief whereby a qualitative disclosure could be made for separately identifiable intangibles in a business combination, particularly those that can be sold or licensed independently from other assets.
• Reintroducing goodwill amortization as an accounting policy choice.

In response to the feedback, the AcSB decided to undertake a research project to better understand the impact of the following considerations on private enterprises and non-for-profit organizations.

• The current challenges with the recognition of intangible assets acquired in a business combination and the subsequent measurement of goodwill.
• The information needs of financial users.

As part of this research, the AcSB will explore the proposals made by the Private Enterprise Advisory Committee.

The AcSB published an online survey to collect feedback from interested parties.

You have until January 31, 2024, to take the survey.

Visit the AcSB website for additional information.