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Posted: 2018-12-26 15:42:59

The Financial Accounting Standards Board (FASB) set a Feb. 18, 2019 deadline for comments on a proposed accounting standards update (ASU) on how nonprofits handle goodwill and measure some intangible assets.

The update is titled “Intangibles — Goodwill and Other (Topic 350), Business Combinations (Topic 805), and Not-for-Profit Entities (Topic 958) Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities.”

FASB issued Accounting Standards Update No. 2014-02 in 2014. The target was simplifying accounting for goodwill and for certain identifiable intangible assets in a business combination. Those amendments were in response to concerns of private companies and their stakeholders about the cost and complexity of the goodwill impairment test and the accounting for certain identifiable intangible assets, among other concerns.

The ASU would permit nonprofits to annually pass up testing goodwill for impairment at the reporting unit level. They would be able to amortize goodwill over 10 years or less, on a straight-line basis, test for impairment upon a triggering event, elect to test for impairment at the entity level, and, incorporate certain customer-related intangible assets and all non-compete agreements into goodwill.

The amendments would apply to all nonprofit entities as defined in the Master Glossary of the FASB Accounting Standards Codification, including those that are conduit bond obligors. A nonprofit entity within the scope of the amendments in this proposed update that elects to apply the accounting alternative in Topic 350, Intangibles — Goodwill and Other, would be subject to all of the related subsequent measurement, derecognition, other presentation matters, and disclosure requirements of the accounting alternative, according to information in the ASU.

A nonprofit entity within the scope of the proposed amendments that elects to apply the accounting alternative in Topic 805, Business

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