Accounting for Identifiable Intangible Assets in a Business Combination for Public Business Entities and Not-For-Profit Entities
Last updated on October 20, 2016. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Updated sections are indicated with an asterisk *)
The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.
Project ObjectiveThis project is intended to evaluate whether certain identifiable intangible assets acquired in a business combination should be subsumed into goodwill for public business entities and not for profit entities.
*Decisions Reached at Last Meeting (October 10, 2016)The Board met to discuss the accounting for goodwill impairment project. As a part of these discussions, the Board decided to suspend deliberations on this project and move it to the research agenda, while evaluating the effectiveness of the accounting for goodwill impairment changes in meeting the Board’s objective and continuing to monitor the IASB’s projects on goodwill and intangibles.
(Note: While the Board did not vote on moving this project to the research agenda, no Board member objected to the move.)
*Tentative Board Decisions Reached to Date (As of October 10, 2016)On October 10, 2016 the Board decided to suspend deliberations on this project and move it to the research agenda, while evaluating the effectiveness of the Accounting for Goodwill Impairment changes in meeting the Board’s objective and continuing to monitor the IASB’s projects on goodwill and intangibles.
On June 20, 2016 the FASB and the IASB discussed the status of their respective projects on (1) accounting for goodwill impairment, (2) subsequent accounting for goodwill, and (3) accounting for identifiable intangible assets in a business combination. No decisions were made.
On October 28, 2015, the Board decided to continue this project by continuing to engage with the international community on this matter.
On November 5, 2014, the Board held a decision-making meeting to discuss accounting for intangible assets. The Board made the following decisions:
The Board decided to add a project to its agenda for public business entities and not-for-profit entities on the accounting for identifiable intangible assets in a business combination. This project will evaluate whether certain intangible assets should be subsumed into goodwill.
The Board asked the staff to consider the implications of potentially subsuming certain intangible assets into goodwill in conjunction with the Board’s other active projects (including a project considering potential changes to the accounting for goodwill that was also discussed at the November 5, 2014, Board meeting) and to consider IASB activities on goodwill and intangible assets in response to its Post-Implementation Review (PIR) of IFRS 3, Business Combinations.
*Next StepsThe Board plans to evaluate the effectiveness of the accounting for goodwill impairment changes in meeting the Board’s objective and to continue monitoring the IASB’s projects on goodwill and intangibles.
*Board/Other Public Meeting DatesThe Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
|*October 10, 2016||Board Meeting—Discussion of the future of the project in conjunction with a discussion on the accounting for goodwill impairment project.|
|June 20, 2016||Joint Board Meeting—Discussion of the FASB and IASB projects on goodwill and intangible assets|
|October 28, 2015||Board Meeting—Discussion of whether to change the initial recognition of certain intangibles in a business combination.|
|September 23, 2015||Joint Board Meeting—Discussion of the Business Combinations projects of the FASB and IASB|
|April 7, 2015||Board Meeting—Update on research and outreach|
|November 5, 2014||Board Meeting—Agenda announcement|
Background InformationIn 2001, FASB Statement No. 142, Goodwill and Other Intangible Assets, superseded APB Opinion No. 17, Intangible Assets (issued in 1970). Opinion 17 required companies to record as assets the costs of intangible assets acquired from other enterprises or individuals, and to amortize those intangible assets over their useful lives, not to exceed 40 years. Opinion 17 stated that the cost of identifiable assets were not to be included in goodwill. Statement 142 maintained the requirement to separately record identifiable intangibles, but allowed for indefinite life intangibles to remain at cost and not be amortized and removed the 40-year maximum amortization period.
At its September 16, 2014, meeting, the Private Company Council (PCC) reached a consensus to change generally accepted accounting principles (GAAP) for private companies on the accounting for identifiable intangible assets in a business combination. The PCC consensus allows private companies to subsume into goodwill customer-related intangible assets (unless they are capable of being sold or licensed independently from the other assets of the business) and noncompetition agreements. In December 2014, the Board endorsed the PCC consensus. As a result of some feedback indicating that certain public business entities and not-for-profit entities experience the same issues as private companies, the Board added this project to its agenda.
Contact InformationAdriana Yepes
Postgraduate Technical Assistant