Goodwill Accounting Alternatives for Private Entities

This white paper discusses the accounting alternatives provided by the Financial Accounting Standards Board (FASB) aimed at simplifying the subsequent accounting for goodwill by private companies and not-for-profit entities. It outlines two primary alternatives: the overall goodwill accounting alternative and the goodwill impairment triggering event alternative. The paper details the scope of these alternatives, including eligibility criteria for entities wishing to elect them. It explains the implications of choosing these alternatives on goodwill amortization, impairment testing frequency, and the overall accounting treatment of goodwill. Additionally, the document summarizes how the election of each alternative affects an entity's financial reporting and compliance with the relevant accounting standards. The paper serves as a comprehensive guide for private companies and not-for-profits considering these accounting options.