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

By Ken Tysiac

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

A proposed Accounting Standards Update issued Thursday 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.

Comments can be submitted through Feb. 18 at FASB’s website.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

SPONSORED REPORT

Get your clients ready for tax season

These year-end tax planning strategies address recent tax law changes enacted to help taxpayers deal with the pandemic, such as tax credits for sick leave and family leave and new rules for retirement plan distributions, as well as techniques for putting your clients in the best possible tax position.

RESOURCES

Keeping you informed and prepared amid the coronavirus crisis

We’re gathering the latest news stories along with relevant columns, tips, podcasts, and videos on this page, along with curated items from our archives to help with uncertainty and disruption.