FASB Plans To Save Some Time and $$

by Kevin McGarry 15. February 2012 16:00
  FASB is listening to its constituents. In response to feedback from respondents, FASB has put forth a proposal intended to reduce costs and simplify the guidance for testing indefinite-lived intangible assets, other than goodwill for impairment. Currently under Topic 350, Intangibles-Goodwill and Other, indefinite-lived intangible assets are required to be tested for impairment annually, or more frequently. In addition to these frequent tests, guidance for evaluating impairment indicators for long-lived tangible assets included in Topic 360, Property, Plant, and Equipment must not be ignored. However, responding to feedback, FASB decided to simplify the guidance testing. There were many concerns about the recurring cost and complexity of calculating the fair value of indefinite-lived intangible assets when the risk of impairment is unlikely. Therefore, it was suggested that the Board consider a qualitative approach or other alternative approaches for assessing indefinite-lived intangible assets for impairment. Under the proposal, Topic 350, Testing Indefinite-Lived Intangible Assets for Impairment, an organization can assess qualitative factors to determine whether performing the quantitative impairment test is necessary. This would save the organization from having to calculate the fair value of an asset unless the qualitative assessment shows that it is “more likely than not” that the asset’s fair value is less than it carrying amount. The amendments would be effective for annual and interim impairment tests performed for fiscal years beginning after June 15, 2012, and early adoption would be permitted. For more information, see FASB’s website.
Categories: Tax