Updates on Accounting for Goodwill  

 

On January 16, 2014, the FASB issued an Accounting Standards Update (ASU) for a private company accounting alternative on accounting for goodwill. The update is listed below.

 

Intangibles - Goodwill and Other (Topic 350): Accounting for Goodwill (ASU 2014-02)

This update permits a private company to subsequently amortize goodwill on a straight-line basis over a period of 10 years, or less if the company demonstrates that another useful life is more appropriate. It also permits a private company to apply a simplified impairment model to goodwill. Under the goodwill accounting alternative, goodwill should be tested for impairment when a triggering event occurs that indicates that the fair value of a company (or a reporting unit) may be below its carrying amount. A private company that elects the accounting alternative is further required to make an accounting policy election to test goodwill for impairment at either the company level or the reporting unit level.

 

The update is effective for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015, with early adoption permitted.

 

For assistance in determining the application of the requirements to your bank or questions related to implementation dates, please contact a local Eide Bailly professional.