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Goodwill private company alternative

Defining Issues | March 2021

FASB finalizes private company alternative for timing of goodwill triggering event assessment.

ASU 2021-03 provides an accounting alternative for private companies and not-for-profit entities to assess goodwill impairment triggering events only at reporting dates (interim or annual).


ASU 2021-03

  • Private companies and NFPs, including NFPs that are conduit bond obligors

Relevant dates

 Private companies and NFPs

Annual periods – Fiscal years beginning after

December 15, 2019

Interim periods – In year of adoption

The earliest interim period in the year of adoption for which financial statements have not been issued (or made available for issuance)

Early adoption permitted?

Yes, for interim or annual financial statements that have not been issued (or made available for issuance)

Key impacts:

  • Provides an accounting alternative for eligible entities to perform a goodwill trigging event assessment only as of their financial reporting date (interim or annual) instead of throughout the reporting period.
  • Does not require an entity to elect the goodwill amortization accounting alternative to qualify for this accounting alternative.
  • Allows adoption through an unconditional one-time election after the effective date without the requirement to assess the preferability of the change.
  • Requires entities that elect the alternative, but later become ineligible (e.g. after an IPO), to reverse the effects of the accounting alternative. The consequences may include assessing triggering events during interim periods, without using hindsight, to determine if goodwill was impaired.
  • Does not affect triggering events for impairment of other assets (e.g. long-lived assets).

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Private Companies

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