The Financial Accounting Standards Board (FASB) on Wednesday tentatively ruled to remove a project regarding identifiable intangible assets and subsequent accounting for goodwill from its technical agenda.
The project has been on the organization’s agenda since October 2018 and sought to consider improving decision usefulness of information around the topic and rebalancing cost-benefit factors. Stakeholders were invited to comment on the project in July 2019, and FASB as recently as May discussed issues relating to the development of a proposed accounting standards update regarding identifiable intangible assets and subsequent accounting for goodwill.
The decision Wednesday was made, in part, considering stakeholder feedback and the organization’s other agenda items. The project could be picked back up in the future.
Goodwill and intangible assets often prove to be common areas of deficiency during audits. Comments FASB discussed at a November 2019 public roundtable on the agenda project noted the preparation, valuation, and auditing costs associated with the subsequent accounting for goodwill, with impairment testing a particular area of cost concern.
Kroll’s “2021 U.S. Goodwill Impairment Study” released earlier this year identified $142.5 billion in goodwill impairment recorded in 2020, a significant rise from $71 billion in 2019. The report attributed the spike to the economic impact of the Covid-19 pandemic.