The Financial Accounting Standards Board (FASB) has proposed an accounting standards update on indefinite-lived intangible asset impairment testing.
The change will not require the calculation of the fair value of an indefinite-lived intangible asset unless the organisation determines, based on a qualitative assessment, that it is “more likely than not” the asset’s fair value is less than its carrying amount.
Indefinite-lived trademarks, licenses and distribution rights are some of the intangible assets subject to the proposal.
“This proposed amendment is intended to reduce the cost of evaluating indefinite-lived intangible assets for impairment without changing the information provided to investors,” FASB chairman Leslie Seidman said.
The update would be effective for annual and interim impairment tests performed for fiscal years beginning after 15 June2012. Early adoption would be permitted.