On April 22nd 2011 FASB addressed a new Proposed Accounting Standards Update under the Topic 350 Intangibles

s Goodwill and Other. Currenct guidance under the Topic 350 requires an entity to test goodwill for impairment, on at least an annual basis, by comparing the fair value of a reporting unit with its carrying amount, including goodwill (step one). (Financial Accounting Standards Board, 2011) If the asset is recognized as impaired, meaning that the fair value of reporting unit is less than its carrying amount, a second step shold be performed in order to measure the amount of the impairment loss (Financial Accounting Standards Board, 2011). Under the proposed Update a company would not be required to calcualte the fair value of a reporting unit (step 1), unless the company has determined that the is more likely than not that its fair vlue is less than its carrying amount (Financial Accounting Standards Board, 2011). New Update would simplify requirments for the companies on testing goodwill for impairment. Rather than annualy testing for impairment and calculating the fair value of a reporting unit a company could determine, based on the qualitative factors (Financial Accounting Standards Board, 2011) whether or not it will perform step 1 or not. This new method will first address whether or not it is more likely than not (Financial Accounting Standards Board, 2011) than an asset has been impaired. If there is a big enough probability of an impairment (treshold level has been set above 50 percent) then the company will proceed with the regular testing for impairment.

Arguments for and against the change. According to the FAST the amandments in this porposed Update are intended to reduce complexity and cost by allowing an entity to make qualitative evaluation about the likehood of goodwill impairments to determine whether it should calculate the fair vale of a report unit. (Financial Accounting Standards Board, 2011)

Works Cited Financial Accounting Standards Board. (2011, April 22). Retrieved December 3, 2011, from www.fasb.org: http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere= 1175822760692&blobheader=application%2Fpdf