FASB Extends Private-Company Accounting Alternatives to Not-for-Profit Entities

The FASB has issued Accounting Standards Update (ASU) No. 2019-06, Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities.

The ASU “enables organizations to recognize fewer items as separate intangible assets in acquisitions and to account for goodwill in a more cost-effective manner.” Under the ASU, not-for-profit entities are allowed to forgo testing goodwill for impairment annually at the reporting level and to instead use an accounting alternative in which:

• Goodwill is amortized “over 10 years or less, on a straight-line basis.”
• Impairment is tested “upon a triggering event.”
• An entity has “the option to elect to test for impairment at the entity level.”

ASU 2019-06 is effective immediately. For more information, see the press release and ASU on the FASB’s Web site.