The FASB has finalized the first accounting alternative proposed by the Private Company Council (PCC) related to the accounting for goodwill by private companies; Accounting Standards Update (ASU) 2014-02 Intangibles – Goodwill and Other (Topic 350): Accounting for Goodwill (ASU 2014-02).
ASU 2014-02 provides certain accounting policy elections that may be made by a qualifying private company with respect to the accounting for goodwill. Entities that qualify are those that do not fall into one of three categories:
- public business entity as defined under ASU 2013-12
- not-for-profit entity
- employee benefit plans
ASU 2014-02 contains three significant components including the amortization of goodwill, the removal of the requirement to conduct an annual impairment test of goodwill and modifications of the impairment test methodology. These three components are described in more detail in our recent publication: Substance of the Standard: Changes in Accounting for Goodwill for Private Companies. In addition, you’ll learn more about how to amortize goodwill, implementation steps and considerations when adopting ASU 2014-02.