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FASB's impairment testing proposal deviates from IFRSs

  • FASB (US Financial Accounting Standards Board) Image

Jan 26, 2012

The FASB has published a proposal under which an entity testing indefinite-lived intangible assets for impairment would have the option of performing a qualitative assessment to determine whether it is more likely than not that the asset is impaired.

Under current U.S. GAAP, assets with indefinite useful lives are similar to those under IAS 36, Impairment of Assets; they are reviewed at least annually for impairment. Under the proposal, certain assets such as trademarks, licenses, and distribution rights could be exempt from this requirement if the asset is determined to be more likely than not less than its fair value. In its proposal, the FASB acknowledges that this new guidance does not converge U.S. GAAP and IFRSs.

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