FASB To Make Life Easier – Step Two

After feeling the love generated by the issuance of ASU 2011-08 creating a Step 0 for the goodwill impairment test (click here for our summary), the FASB has proposed similar guidance for testing indefinite-lived intangible assets for impairment (click here for the proposal). If the client believes that it is not more likely than not that the asset is impaired, the new rules would let clients use qualitative factors (Step 0) to determine if it must make a quantitative assessment (Step 1).

As with the new Step 0 for the goodwill impairment assessment, this rule (assuming it is approved) would often eliminate the need to push the numbers when considering impairment of such intangible assets as licenses, etc.

There shouldn’t be much argument about this proposal, so the FASB expects to finalize it soon after the end of the comment period in April, and to make it effective for interim and annual periods beginning after June 15, 2012, with early adoption allowed.


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About John Hufnagle

John is an auditing, accounting and financial reporting specialist with over 40 years of public accounting experience. He was formerly a senior technical partner of a national accounting firm.
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