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

Private company exceptions may see wider use.

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.

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