Last week, the AICPA’s Financial Reporting Executive Committee released for public comment a working draft of Chapter 2, “Qualitative Assessment,” of the AICPA’s Accounting and Valuation Guide Testing Goodwill for Impairment. The proposed new chapter describes the optional qualitative assessment under FASB Accounting Standards Codification (ASC) Subtopic 350-20, Intangibles — Goodwill and Other: Goodwill.¹ ASC 350-20 gives entities the option to forgo the required quantitative impairment test if they can conclude, on the basis of a qualitative assessment of relevant events and circumstances, that the fair value of a reporting unit is not more likely than not less than its carrying amount. The new chapter contains an example illustrating one approach to performing such qualitative assessment.

Comments on the working draft are due by December 31, 2012. See the AICPA’s press release for additional information.

[1] FASB Accounting Standards Codification Update (ASU) No. 2011-08, Testing Goodwill for Impairment, added the optional qualitative assessment to ASC 350-20. ASU 2011-08 was effective for annual and interim impairment tests performed for fiscal years beginning after December 15, 2011.