The Financial Accounting Standards Board
(FASB) is moving forward on the exposure draft for impairment testing of intangible assets, such as indefinite-lived trademarks, licenses, and distribution rights.
The board has reviewed comment letters on Accounting Standards Update (ASU), Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets, which will allow entities to use a qualitative approach to assess the impairment of these types of assets. If the assessment determines the asset is no more than 50% likely to be impaired, a quantitative impairment test would not be necessary.
The FASB also decided that nonpublic entities would not need to provide quantitative disclosures about significant unobservable inputs utilized in a Level 3 fair value measurement of an indefinite-lived intangible asset after its recognition. Public entities will still be required to make these quantitative disclosures.
The board also clarified public or private company determination when an entity is or has a consolidated subsidiary of a public company.