FASB voted Wednesday to add a project to its technical agenda that would provide certain private companies and not-for-profits with an option to perform goodwill triggering event evaluation only on the annual reporting date.
If approved, the proposed alternative would be limited to private companies and not-for-profits that only prepare GAAP-compliant financial statements on an annual basis. The proposed alternative would not be available to private companies and not-for-profits that prepare GAAP-compliant financial statements in interim periods.
FASB directed its staff to create an exposure draft with a 30-day comment period. FASB’s goal is to make the proposed option available to preparers in time to be applied to 2020 calendar year-end financial statements, with an early-adoption option to accommodate entities with earlier year ends that have not yet issued financial statements.
The project is responsive to concerns of private companies that experienced what would have been a triggering event for impairment in the early days of the coronavirus pandemic in March and April but later recovered and do not expect to have impairments at year end. The AICPA Technical Issues Committee advocated with FASB on this issue for private companies and not-for-profits as a result of challenges they have faced because of the pandemic.
Board members, though, said they support the project more broadly as an opportunity to reduce cost and complexity for financial statement preparers.
The ED will propose a prospective transition method.
— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.