NEWS RELEASE 01/25/12
FASB Publishes Proposal for Impairment of Indefinite-Lived Intangible
AssetsNorwalk, CT, January 25, 2012—The Financial
Accounting Standards Board (FASB) today issued for public comment a proposed
Accounting Standards Update on indefinite-lived intangible asset impairment
testing that is intended to simplify impairment assessment and reduce the
recurring costs to comply with existing guidance while improving the consistency
of testing methods among long-lived asset categories for preparers. Examples of
intangible assets subject to the proposal would include indefinite-lived
trademarks, licenses, and distribution rights. The standard would apply to all
public, private, and not-for-profit organizations.
The amendments would
allow an organization the option to first assess qualitative factors to
determine whether it is necessary to perform the quantitative impairment test.
An organization electing to perform a qualitative assessment no longer would be
required to calculate the fair value of an indefinite-lived intangible asset
unless the organization determines, based on a qualitative assessment, that it
is "more likely than not" that the asset´s fair value is less than its carrying
Under the current guidance (FASB Accounting Standards
Codification® Subtopic 350-30, Intangibles—Goodwill and Other—General
Intangibles Other than Goodwill), an organization is required to test an
indefinite-lived intangible asset for impairment, on at least an annual basis,
by comparing the fair value of the asset with its carrying amount. If the
carrying amount of an indefinite-lived intangible asset exceeds its fair value,
an impairment loss is recognized in an amount equal to the difference.
"This proposed amendment is intended to reduce the cost of evaluating
indefinite-lived intangible assets for impairment without changing the
information provided to investors," said Leslie F. Seidman, chairman of the
FASB. "The proposed amendment is similar to the simplification that the Board
issued last year relating to the impairment testing of goodwill."
amendments in this proposed Update would be effective for annual and interim
impairment tests performed for fiscal years beginning after June 15, 2012. Early
adoption would be permitted.
The exposure draft is open for comment
until April 24, 2012 and can be accessed at http://www.www.fasb.org.
Between now and the end of the comment period, the Board will conduct
additional outreach with preparers, users, and auditors of financial statements
to solicit their input on the proposal. Further information including a podcast
and a ‘FASB In Focus´— high-level summaries of the proposal—are available on the
FASB website at www.fasb.org.
the Financial Accounting Standards Board
Since 1973, the
Financial Accounting Standards Board has been the designated organization in the
private sector for establishing standards of financial accounting and reporting.
Those standards govern the preparation of financial reports and are officially
recognized as authoritative by the Securities and Exchange Commission and the
American Institute of Certified Public Accountants. Such standards are essential
to the efficient functioning of the economy because investors, creditors,
auditors, and others rely on credible, transparent, and comparable financial
information. For more information about the FASB, visit our website at www.fasb.org.