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FASB Goodwill Impairment Standard Issued

Last week, the Financial Accounting Standards Board (“FASB”) published Accounting Standards Update (“ASU”) No. 2017-04, Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment. A result of the Simplification Initiative, the standard simplifies how a company tests goodwill for impairment by eliminating “Step 2”, which measures impairment loss by comparing the carrying amount of goodwill to its implied fair value. In its news release, the FASB said the ASU will allow companies to measure goodwill impairment as the excess of the reporting unit’s carrying value over its fair value. Stakeholders had complained that the current impairment test creates. Read More.

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Equity Method of Accounting Updated

Impacting companies with an investment that now qualifies for the equity method of accounting due to increased ownership interest or influence, the Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (ASU) No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. Current GAAP requires that when an investment was previously below the threshold for equity method but then qualifies, the investor was required to retroactively value the investment as if it had been under the equity method from the initial purchase. As part of the simplification initiative, ASU. Read More.

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