FASB proposes extending 2 GAAP alternatives to not-for-profits

FASB proposed that not-for-profits be permitted to use two GAAP alternatives that are currently available only to private companies.

A proposed Accounting Standards Update would allow not-for-profits to elect the private company alternatives on accounting for goodwill and accounting for identifiable intangible assets in a business combination.

Under the proposal, instead of testing goodwill for impairment annually at the reporting unit level, a not-for-profit that chooses the GAAP alternative would:

• Amortize goodwill over 10 years or less, on a straight-line basis;
• Test for impairment upon a triggering event;
• Have the option to elect to test for impairment at the entity level; and
• Have the option to subsume certain customer-related intangible assets and all noncompete agreements into goodwill.

FASB Chairman Russell Golden said the proposal was developed in response to concerns from stakeholders that the costs for not-for-profits of the current accounting for goodwill and intangible assets in a business combination were not justified by the benefits.

“This proposed standard … will enable them to recognize fewer items as separate intangible assets in acquisitions and to account for goodwill in a more cost-effective manner,” Golden said in a news release.

The comment deadline was Feb. 18.