Developments in accounting for goodwill in the US

As is the case under IFRS, US GAAP currently requires that goodwill arising on business acquisitions is annually tested for impairment, rather than amortised. There are, however, differences in the detail, and the FASB has relaxed the rules for private and not-for-profit companies, allowing them the option to amortise goodwill. Recently, the FASB began a public consultation which includes the idea of extending this relief to public companies. This article looks at the background to this development, and the questions raised by the consultation. It also incorporates points that came up in discussion in the Joint Education Session of the IASB and the FASB in July 2019 to analyse the relative positions of the two Boards.