The AICPA Not-for-Profit Entities Expert Panel developed nonauthoritative guidance in response to an accounting alternative for private companies developed by the PCC.

The guidance is contained in Q&A Section 6140.26 of the AICPA Technical Questions and Answers at

In January 2014, FASB issued a standard that originated with the PCC and exempts private companies from the requirement to annually perform impairment testing for goodwill subsequent to a business combination.

The standard, ASU No. 2014-02, Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill (a consensus of the Private Company Council), provides an alternative for private companies, allowing them to amortize goodwill on a straight-line basis over 10 years, or less than 10 years if the entity can demonstrate that another useful life is appropriate.

The guidance developed by the Not-for-Profit Entities Expert Panel is intended for any not-for-profit entity that has a for-profit subsidiary that it consolidates under GAAP. The for-profit subsidiary could adopt the accounting alternative in ASU No. 2014-02 in its stand-alone financial statements, according to the expert panel.

But the for-profit subsidiary is not permitted to use the amortization accounting alternative in the consolidated financial statements, according to the expert panel. This is because the reporting entity is the consolidated not-for-profit entity, which is not currently permitted to adopt the accounting alternative.


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