FASB Approves Shortened Goodwill Impairment Test

December 5, 2016

A simplified version of the goodwill impairment test was approved by the Financial Accounting Standards Board (“FASB”). Receiving approval this week, the amendments offered in Proposed Accounting Standards Update No. 2016-230, Intangibles — Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment, are likely to be published early next year. The proposal eliminates Step 2 of the two-step process for calculating the impairment of a company’s acquired goodwill.

Once published, the amendments will be effective for public companies in 2019. Privately held businesses must apply the amendments in 2020.