[gksrnrtkfka]

Hey everyone, I just had a question about goodwill amortization.

In the Ninja notes it says that goodwill is amortized over 10 years under the Public Company Framework. I was under the impression that goodwill is only amortized for private companies and not amortized for public companies, so the fact that this is listed under the Public Company Framework throws me off.

Would someone care to explain?

[Anonymous]

U don't amortize Goodwill – ever. Goodwill is only Impaired and Written Down. This is what I remember from FAR.

[Stilgoin]

Not true per FASB Topic 350:

FASB Accounting Standards Update No. 2014-02, Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill, permits a private company to subsequently amortize goodwill on a straight-line basis over a period of ten years, or less if the company demonstrates that another useful life is more appropriate. It also permits a private company to apply a simplified impairment model to goodwill. Goodwill is the residual asset recognized in a business combination after recognizing all other identifiable assets acquired and liabilities assumed.

Ninja must have a typo because this is for private companies.

I see this issue a lot, and it was one of the main problems I had with my previous CPA. Rules are ever-changing in accounting, and lest we forget- Google is a verb. I guess I do owe my previous CPA some credit, as his short-comings are part of the reason I will soon be a CPA. 😉

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[Spartans92]

^^ that trumps everything! Dang, I dont know how I'm gonna remember all these details. Taking the lesser of this and the greater of that.

BEC- PASS

[Stilgoin]

@Spartans92 You will get it this time- I know it. 😉

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[gksrnrtkfka]

@stilgoin

Ninja note says Public company framework is GAAP. I think if it is typo and Private company framework is right, isn't it supposed be None-GAAP?

I copied Ninja note below

Public Company Framework
o Developed by the FASB
o GAAP
o Small Company Lease Accounting
§ Private companies can bypass Variable
Interest Entity rules for Leases
§ Instead, Lease disclosures are made

[waffle_house]

Private companies can amortize goodwill for 10 years or lesser.
Public companies cannot amortize goodwill, only impairment using the two step approach at the reporting unit level. IFRS using the 1 step approach at the cash generating unit.

Easy right?

[Stilgoin]

The Private Company Framework is created by the Private Company Council and FASB. FrF for SMEs is created by the AICPA.

Read the following article- note the differences for Goodwill, as any of these can show up on a FAR exam.

😉

https://claytonmckervey.com/blog/2015/08/04/private-company-reporting-options-frf-for-smes-vs-private-company-council-gaap/

Through the PCC- private companies can amortize GW for 10 years or less, with simplified impairment and is created by FASB, so is basically GAAP. Through the FrF for SMEs, private companies can amortize GW for 15 years or over the tax life with no impairment and is created by AICPA and is not GAAP. For public companies, there is no amortization of GW; it has a triggered 2 step impairment test, created by FASB and is GAAP.

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[Anonymous]

Financial reporting framework for SME is not GAAP. It's a financial reporting basis like cash, modified cash, contractual, etc.

[Stilgoin]

“Through the FrF for SMEs, private companies can amortize GW for 15 years or over the tax life with no impairment and is created by AICPA and is not GAAP.”

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[Author]

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