FASB Approves Amendments to Goodwill Impairment Guidance
This week, the FASB approved issuance of a final ASU on testing goodwill for impairment. Under the revised guidance, entities testing goodwill for impairment would have the option of performing a qualitative assessment before calculating the fair value of a reporting unit (i.e., step 1 of the goodwill impairment test). If entities determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not greater than the carrying amount, a quantitative calculation would not be needed.
The FASB staff also presented input received from workshops held to discuss implementation issues with, and concerns about, the exposure draft. After considering the input received, the Board agreed with the staff that the proposal was operational and that significant changes to the proposed model were not necessary.
The final ASU is expected to be issued in September 2011 and will be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption will be permitted.
For details on the proposal, see Deloitte’s April 25, 2011, Heads Up and June 30, 2011, journal entry.