The Accounting Standards Board (AcSB) was made aware of challenges faced by private enterprises with respect to the recognition of intangible assets and subsequent measurement of goodwill. More specifically, preparers have mentioned the cost and complexity of:
- estimating the fair value of certain intangible assets acquired in a business combination; and
- carrying out the goodwill impairment tests.
In addition, the Board has received feedback that goodwill and quantitative information about some intangible assets may not be decision-useful for financial statement users of private enterprises and not-for-profit organizations.
We have decided to undertake a project to better understand how the following considerations affect private enterprises and not-for-profit organizations:
- the current challenges with the recognition of intangible assets acquired in a business combination and the subsequent measurement of goodwill
- the information needs of financial statement users
As part of this project, we will also explore whether to propose relief from the recognition of intangible assets acquired in a business combination and whether we should propose a change to allow entities to amortize goodwill.