What are the potential consequences to financial statements

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Consider the recent FASB changes/proposal to accounting for goodwill.

Problem 1. FASB issued ASU (Accounting Standards Update) 2014-02 allowing private companies to amortize goodwill over a 10-year period or less, instead of writing down an impaired asset in the same period. This was based on part on advice from the PCC that users of private company financial statements ignore goodwill and its impairment. Do you think it's a mistake that financial statement users ignore goodwill and its impairment? And do you think this Accounting Standard update will make a difference to users of private company's financial statements?

Problem 2. FASB issued ASU 2017-04 to simplify the impairment test for public firms by eliminating the acquisition method requirement to calculate fair value? What do you think are/will be the consequences of this standard update?

Problem 3. The FASB on December 16, 2020, tentatively said it would require public companies to amortize goodwill over a 10-year period on a straight-line basis. What are the potential consequences to financial statements and potential for managing earnings if this were to be implemented?

 

Reference no: EM132826327

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