Summary of Board decisions are provided for the information and convenience of constituents who want to follow the Board´s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in redeliberations based on information provided to the Board in comment letters, at public roundtable discussions, and through other communication channels. Decisions become final only after a formal written ballot to issue an Accounting Standards Update.

June 6, 2012 FASB Board Meeting

Impairment of indefinite-lived intangible assets. The Board discussed comment letters and other feedback received on the Exposure Draft, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, and discussed the staff´s analysis of the Exposure Draft´s proposals in light of that input.

The Board affirmed its proposal to provide entities with the option to use a qualitative approach to assess the impairment of an indefinite-lived intangible asset. Under that approach, an entity would qualitatively assess whether existing events or circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired (the more-likely-than-not threshold refers to a likelihood that is more than 50 percent). An entity would not be required to perform a quantitative impairment test (comparing the fair value of the asset with its carrying value) if, after assessing the totality of relevant events and circumstances, management determines that it is not more likely than not that the indefinite-lived intangible asset is impaired. The Board also affirmed that additional disclosure requirements would not be necessary relating to the use of the optional qualitative assessment.

The Board decided that the impairment guidance would be more understandable if it included examples of the types of events and circumstances to be considered in performing the qualitative assessment, rather than a cross reference to the examples in the goodwill impairment test guidance (paragraph 350-20-35-3C(a) through (e)). The Board also decided not to include the sustained decrease in share price as an example of events and circumstances to be considered in performing the qualitative assessment.

The Board affirmed that a nonpublic entity would not be required to provide quantitative disclosures about significant unobservable inputs used in a Level 3 fair value measurement of an indefinite-lived intangible asset after its initial recognition. The Board also affirmed that a public entity would continue to be required to provide those disclosures.

The Board affirmed that it acknowledges that the more time that elapses since an entity last calculated the fair value of an indefinite-lived intangible asset, the more difficult it may be to make a conclusion based solely on the qualitative assessment of relevant events and circumstances. The Board decided to retain such acknowledgement in the basis for conclusions to enhance the consistency of impairment testing guidance between indefinite-lived intangible assets and goodwill.

The Board decided not to include additional implementation guidance in the final Accounting Standards Update.

The Board decided to clarify that the more likely than not threshold used in the qualitative impairment assessment would apply for performing an impairment assessment in interim periods. Current guidance in paragraph 350-30-35-18 states that an interim test must be performed "if events or changes in circumstances indicate that the asset might be impaired." This clarification would align the threshold for interim test with the annual impairment test of indefinite-lived intangible assets as well as with the guidance for goodwill impairment.

The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot. The Board decided that the final amendments would be applied prospectively for annual and interim impairment tests performed for fiscal periods beginning after September 15, 2012. Early adoption would be permitted.

Not-for-profit financial reporting: financial statements. The Board discussed the staff´s proposed project plan, which reflects feedback received from project resource group members. Board members expressed support for the proposal, directing the staff to proceed as planned.

Definition of a nonpublic entity. The Board decided that a company that otherwise meets the characteristics of a private company as defined in this project would be deemed a private company for financial reporting purposes if:
  1. It is a consolidated subsidiary of an entity that is a public company, or
  2. One of its controlled and consolidated subsidiaries is a public company.
The Board also decided that an employee benefit plan would not be deemed a private company for financial reporting purposes.

Revenue recognition. The FASB considered a summary of the feedback received from outreach activities with nonpublic entity stakeholders undertaken between September 2011 and May 2012 and nonpublic entity stakeholder comment letters on the revised Exposure Draft, Revenue from Contracts with Customers. This summary will be posted on the revenue recognition project page on the FASB´s website.