Examples of intangible assets subject to the proposal would include indefinite-lived trademarks, licenses, and distribution rights. The standard would apply to all public, private and not-for-profit organisations.
The amendments would allow an organisation the option first to assess qualitative factors, to determine whether it is necessary to perform the quantitative impairment test. An organisation electing to perform a qualitative assessment no longer would be required to calculate the fair value of an indefinite-lived intangible asset unless the organisation determines, based on a qualitative assessment, that it is “more likely than not” that the asset’s fair value is less than its carrying amount.
Under the current guidance (FASB Accounting Standards Codification® Subtopic 350-30, Intangibles—Goodwill and Other—General Intangibles Other than Goodwill), an organisation is required to test an indefinite-lived intangible asset for impairment, on at least an annual basis, by comparing the fair value of the asset with its carrying amount. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognised in an amount equal to the difference.
The amendments in this proposed Accounting Standards Update would be effective for annual and interim impairment tests performed for fiscal years beginning after June 15, 2012. Early adoption would be permitted.
The exposure draft is open for public comment until 24 April, 2012.
Press release
© FASB
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