FASB's Impairment Testing Proposal Deviates from IFRS

The United States Financial Accounting Standards Board (FASB) has published a proposal in which an entity testing indefinite-lived intangible assets for impairment would have the option of performing a qualitative assessment to determine whether it is more likely than not that the asset is impaired.

Under current US GAAP, assets with indefinite useful lives are similar to those under IAS 36 Impairment of Assets; they are reviewed at least annually for impairment. Under the proposal, certain assets such as trademarks, licenses and distribution rights could be exempt from this requirement, if the asset is determined to be more likely than not less than its fair value. In their proposal, the FASB acknowledges that this new guidance does not converge US GAAP and IFRS.