Not-for-profit entities have a new, optional accounting alternative for evaluating goodwill impairment triggering events. The accounting alternative is intended to simplify and eliminate the requirement to monitor for triggering events throughout the reporting period that would cause an entity to perform a test for goodwill impairment. Rather than performing a continuous assessment of triggering events, an entity electing the alternative would evaluate the existence of a goodwill impairment triggering event as of an interim or annual reporting date. The new alternative is available for not-for-profit entities that account for goodwill as an indefinite-lived asset as well as not-for-profit entities that have elected to amortize goodwill. It is available for entities that have not yet issued their Dec. 31, 2020 financial statements and could cause some entities that experienced significant, but short-lived impacts from COVID-19 to forgo performing a test of goodwill impairment during 2020. The policy election to apply the alternative can also be made at a future date.
On May 20, the Financial Accounting Standards Board (FASB) voted to move forward with a deferral of the effective date for the new revenue recognition for private not-for-profits and a leasing standard delay for private and public not-for-profit organizations. Changes to the effective date are designed to provide some relief for organizations and to a not-for-profit sector that may be particularly hard hit by the repercussions from the COVID-19 pandemic.
Financial Accounting Standards Board,
ASC Topic 606,
The effective date for the new leasing standard under ASC Topic 842 will be here before you know it. Not-for-profit organizations that issue or are conduit bond holders for securities that are traded, listed, or quoted on an exchange or over-the-counter market begin adoption for fiscal years beginning after Dec. 15, 2018 (and interim periods within those fiscal years), and all other organizations must adopt the standard for fiscal years beginning after Dec. 15, 2019 (Jun. 30, 2021 financial statements).
asc topic 842