Update: FASB and Accounting for Goodwill

By: PJ Patel

PJ Patel, Co-CEO of VRC, provides a two-minute video update on his involvement with the FASB and the current state of the FASB’s project to revisit the standards for accounting for goodwill and identifiable intangible assets.

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[Transcription]

I’m PJ Patel, co-CEO of VRC. I want to provide a quick update on the FASB’s activities on accounting for goodwill.

As many of you know, the FASB issued an invitation to comment over the summer to ask for our viewpoints on how to account for goodwill.

The FASB received over 100 comment letters, including one from the CFA Institute. They also held a roundtable mid-November to discuss best practices around accounting for goodwill, and included preparers, users, auditors, and other stakeholders as part of that meeting.

Today the FASB continues to deliberate. Interestingly, Gary Buesser, who is a board member at the FASB, did provide his own comments and thoughts around accounting for goodwill. Others will continue to share comments as well. As I mentioned, the CFA Institute provided a lengthy response to the FASB’s invitation to comment.

Deliberations continue. They’re not expecting to make a decision on this until maybe later on in the year, late summer, maybe even fall.

One of the items I get asked frequently is “where’s the FASB going to land on this issue?”, and really, the pendulum seems to be swinging back and forth. For a while, it seemed as though the FASB was really leaning towards amortization of goodwill. Today I think it’s less certain, in terms of what that outcome was likely to be.

Again, the users are having a significant input on this, the CFA Institute in particular, and I think, as we move forward, getting the viewpoints of all of the stakeholders will be critical in landing at the right spot.