On December 20th, the Financial Accounting Standards Board (FASB) delivered an early Christmas present to nonprofits in the form of a proposed Accounting Standards Update (ASU) that would extend to all nonprofits certain simplifying accounting alternatives now afforded only to private companies.
Under the proposed standard, nonprofits no longer would be precluded from amortizing goodwill and would have options for impairment testing at either the entity or reporting-unit level. Certain identifiable intangible assets obtained in an acquisition of another entity or operation could be included in goodwill instead of being accounted for separately as is currently required, thus simplifying current accounting and financial reporting for nonprofits.
A nonprofit may elect the Goodwill Alternative and not the Identified Intangibles Alternative. However, if a nonprofit elects the Identified Intangibles Alternative, it must also adopt the Goodwill Alternative to amortize goodwill.
The proposed ASU includes detailed information, as well as interesting commentary in the Background Information and Basis for Conclusions section at the end. To see the complete proposed ASU on FASB’s website, click here.
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