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FASB simplifies measurement of goodwill impairment test

  • FASB document Image

Jan 26, 2017

The FASB has issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” which removes step 2 from the goodwill impairment test.

As a result, under the ASU, “an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount [and] should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.”

The ASU’s effective dates are as follows:

  • For public business entities that are SEC filers, December 15, 2019.
  • For public business entities that are not SEC filers, December 15, 2020.
  • For all other entities, including not-for-profit entities, December 15, 2021.

For more information, see Deloitte's Heads Up newsletter as well as the ASU on the FASB’s Web site.

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