The Financial Accounting Standards Board (FASB) is making progress in its efforts to simplify accounting standards for privately held companies. The FASB created the Private Company Council within its organization and is beginning to issue updates in accounting standards for private companies. This is good news for owners and stakeholders for private companies.

Recently, FASB issued Acccounting Standards Update 2014-02 “Accounting for Goodwill a consensus of the Private Company Council”.  This standard provides private companies the option to amortize goodwill over a life of ten years, or less based on management’s evaluation of the estimated useful life of goodwill. Under this option a company’s annual test for goodwill impairment is also simplified by adding a first step to the test as to whether there has been a “triggering event” that would affect the carrying value of goodwill.

If there is no triggering event, you are done with your impairment test. How’s that for simple?

Written by Dana Arthur