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Deloitte comments on FASB’s invitation to comment on certain identifiable intangible assets and the subsequent accounting for goodwill

Published on: Oct 08, 2019

Deloitte & Touche LLP has commented on the FASB’s Invitation to Comment (ITC), Identifiable Intangible Assets and Subsequent Accounting for Goodwill.

An excerpt from the comment letter is shown below: 

We understand that conceptually, goodwill is arguably a nonwasting (i.e., nonamortizing) asset or a wasting (i.e., amortizing) asset, as discussed in the Basis for Conclusions of Statement 142. The conceptual arguments for these two treatments (as well as the other two treatments then considered by the Board) have remained largely unchanged. Such arguments address why both a nonamortization model and an amortization model are relevant and faithfully represent the economics of a transaction. Accordingly, we believe that additional input from users and preparers about the costs and benefits of the impairment-only model and the amortization model will be useful in the evaluation of alternative approaches. However, the final model the Board selects should be aligned to, and consistent with, the conceptual basis it chooses.

We believe that when evaluating the costs of applying the current impairment-only model, the Board should identify costs in addition to those that result from annual and trigger-based testing. Such costs include, for example, those related to the identification of reporting units, the assignment of assets to reporting units, and the fair value measurements required when reporting units are reorganized and when a portion of a reporting unit constituting a business is disposed of. If the Board pursues the retention of an impairment-only model, we believe that it should consider additional amendments to reduce the burdens associated with the test. When determining the test’s unit of account, the Board could consider levels between the reporting unit and the entity level, such as the reportable or operating-segment level.

Full text of the comment letter is available below.

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