FASB Votes on Targeted Improvements to Goodwill Accounting Standards
The Financial Accounting Standards Board (FASB) has voted to proceed with targeted improvements aimed at simplifying goodwill accounting standards. The new project will focus on the level and frequency of impairment testing for goodwill, proposing changes such as eliminating annual tests and shifting evaluation from reporting units to operating segments. Under current rules, companies must annually assess goodwill impairments under GAAP. FASB staff argued that moving to an operating segment-level test would reduce complexity and align better with financial reporting structures. The decision follows a previous abandoned project four years ago exploring the amortization of goodwill over time. FASB Vice Chair Hillary Salo supported removing annual tests due to their high cost, though she expressed concerns about potential complications from event-triggered testing instead.
Topics: FASB financial_reporting goodwill impairment_testing