On May 29, 2019, the FASB issued Accounting Standards Update (ASU) 2019-06, extending two private company reporting alternatives to not-for-profit entities with regard to goodwill and intangible assets. Effective immediately, this ASU will help reduce not-for-profits’ costs for accounting in these areas by allowing them to:
- Amortize goodwill on a straight-line basis over 10 years (or less if demonstrated to be more appropriate), test goodwill for impairment upon a triggering event and have the option to elect to test for impairment at the entity level (Topic 350).
- Include in goodwill (versus separate identification) noncompete agreements, and customer-related intangible assets incapable of being sold or licensed independently (Topic 805).
Note that if an entity elects Topic 805, it must adopt Topic 350, but not vice versa.
Simplifying the accounting and reporting for these key areas not only reduces the complexity of the financial statements, but allows the users of those statements to focus more on a not-for-profit’s mission, operations, sustainability and cash flows.
Please contact a member of your service team, or contact Marie Brilmyer at firstname.lastname@example.org for further discussion.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.