FASB Issues Final Standard on Qualitative Goodwill Impairment Assessment

To simplify the process of testing goodwill for impairment for both public and nonpublic entities, on September 15, 2011 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. This ASU gives an entity the option in its annual goodwill impairment test to first assess revised qualitative factors to determine whether it is more likely than not (a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount (qualitative assessment). In certain cases, this will allow an entity to forego the existing two-step goodwill impairment test.

McGladrey & Pullen's National Professional Standards Group has issued the following white paper discussing the revised qualitative factors to be used in the qualitative assessment, the effective date of the ASU, and important adoption considerations.

FASB Issues Final Standard on Qualitative Goodwill Impairment Assessment