News Release 12/20/18

FASB Proposes Alternative to Accounting for Goodwill and Certain Identifiable Intangible Assets for Not-for-Profits

Norwalk, CT, December 20, 2018—The Financial Accounting Standards Board (FASB) today issued a proposed Accounting Standards Update (ASU) that would reduce the cost and complexity of accounting for goodwill and measuring certain identifiable intangible assets for not-for-profit organizations. Stakeholders are encouraged to review and provide input on the proposed ASU by February 18, 2019.
In 2014, the Private Company Council (PCC) worked with the FASB to issue two private company alternatives on the Accounting for Goodwill and the Accounting for Identifiable Intangible Assets in a Business Combination. The FASB issued the two standards to address concerns expressed by private companies and their stakeholders about the cost and complexity of the goodwill impairment test and the accounting for certain identifiable intangible assets, among other concerns.
“Stakeholders subsequently told us that these two private company alternatives would also benefit not-for-profit organizations—as the benefits of current accounting for goodwill and identifiable intangible assets in a business combination did not justify the costs,” said FASB Chairman Russell G. Golden. “This proposed standard simply extends the scope of the two private company alternatives to not-for-profits, which will enable them to recognize fewer items as separate intangible assets in acquisitions and to account for goodwill in a more cost-effective manner.”
In this proposed ASU, instead of testing goodwill for impairment annually at the reporting unit level, a not-for-profit organization that elects the accounting alternative would:
  • Amortize goodwill over 10 years or less, on a straight-line basis
  • Test for impairment upon a triggering event
  • Have the option to elect to test for impairment at the entity level, and
  • Have the option to subsume certain customer-related intangible assets and all non-compete agreements into goodwill. 
The proposed ASU is available at

About the Financial Accounting Standards Board

Established in 1973, the FASB is the independent, private-sector, not-for-profit organization based in Norwalk, Connecticut, that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP). The FASB is recognized by the Securities and Exchange Commission as the designated accounting standard setter for public companies. FASB standards are recognized as authoritative by many other organizations, including state Boards of Accountancy and the American Institute of CPAs (AICPA). The FASB develops and issues financial accounting standards through a transparent and inclusive process intended to promote financial reporting that provides useful information to investors and others who use financial reports. The Financial Accounting Foundation (FAF) supports and oversees the FASB. For more information, visit