Norwalk, CT, May 30, 2019—The Financial Accounting Standards Board (FASB) today issued an Accounting Standards Update
(ASU) that reduces the cost of accounting for goodwill and measuring
certain identifiable intangible assets for not-for-profit organizations.
The standard is effective immediately.
In 2014, the Private Company Council (PCC) worked with the FASB to issue two private company alternatives on accounting for goodwill and accounting for identifiable intangible assets in a business combination. Stakeholders told the FASB that these two private company alternatives would also benefit not-for-profit organizations.
This ASU extends the scope of the two private company alternatives to not-for-profits, enabling organizations to recognize fewer items as separate intangible assets in acquisitions and to account for goodwill in a more cost-effective manner.
In the ASU, instead of testing goodwill for impairment annually at the reporting unit level, a not-for-profit organization that elects the accounting alternative will: