FASB extends GAAP alternatives to not-for-profits

The amendments took effect immediately.

Not-for-profit financial statement preparers will be able to take advantage of two GAAP alternatives that FASB originally developed for private companies.

FASB recently issued a standard that will make not-for-profits eligible for the private company alternatives on accounting for goodwill and accounting for identifiable intangible assets in a business combination.

The alternatives for private companies were issued in 2014 as a result of work that originated with the Private Company Council. The new standard will enable not-for-profits to recognize fewer items as separate intangible assets in acquisitions and to account for goodwill in a more cost-effective manner. This can make accounting less complicated and less costly for not-for-profits.

The amendments took effect upon the issuance of the standard, and not-for-profits have the same open-ended effective date and unconditional one-time election that private companies have.

  • FASB eases transition to credit losses standard. FASB addressed a transition challenge to its new credit losses standard by issuing Accounting Standards Update No. 2019-05, Financial Instruments — Credit Losses (Topic 326): Targeted Transition Relief. Under the new standard, preparers are permitted to irrevocably elect the fair value option, on an instrument-by-instrument basis, for eligible financial assets measured at amortized cost basis upon adoption of the credit losses standard.

Where to find January’s flipbook issue

Starting this month, all Association magazines — the Journal of Accountancy, The Tax Adviser, and FM magazine (coming in February) — are completely digital. Read more about the change and get tips on how to access the new flipbook digital issues.

SPONSORED REPORT

Get your clients ready for tax season

Upon its enactment in March, the American Rescue Plan Act (ARPA) introduced many new tax changes, some of which retroactively affected 2020 returns. Making the right moves now can help you mitigate any surprises heading into 2022.