FASB Revisits Goodwill Accounting Challenges, May Restart Shelved Project
The Financial Accounting Standards Board (FASB) revisited goodwill accounting treatment at its February 4, 2026 meeting, marking the first formal deliberation since the project was shelved in 2022. A majority of board members supported staff conducting additional research, but no vote was taken on whether to add the goodwill project to the technical agenda. Staff presented five possible solutions, including amortization, expanding the private company alternative, immediate write-off, enhanced disclosures, or simplifying the impairment model. FASB Chairman Richard Jones personally favors the amortization approach but is skeptical about its passage.
Nearly four years after shelving a multi-year project on goodwill accounting reform, the Financial Accounting Standards Board (FASB) is revisiting this thorny issue. Previously, FASB abandoned an initiative in 2022 aimed atchanging the accounting treatment of goodwillin a long-term project.
Based on discussions arising from FASB's formal outreach activities in 2025, stakeholders again raised the challenge of improving goodwill-related standards under U.S. Generally Accepted Accounting Principles (GAAP). At a regular meeting on Wednesday (February 4, 2026), the board considered adding the goodwill issue to its technical agenda but ultimately decided to defer a decision on whether to launch a new goodwill project.
"There was no vote today," FASB spokesperson Christine Klimek said in an email. "However, a majority of board members supported staff conducting additional research to present agenda decision recommendations to the board at a future meeting."
Goodwill arises when a company acquires another business for more than its book value. Under GAAP, companies must annually recalculate the value of goodwill assets to determine whether impairment has occurred.
As previously reported by CFO Dive, during the COVID-19 pandemic in 2020, extreme market volatility complicated fair value assessments and future cash flow forecasts, leading many CFOs to reconsider their approaches to goodwill impairment testing.
At Wednesday's meeting, staff indicated that changes are needed. "Based on feedback from the Invitation to Comment, staff believes it is necessary to improve GAAP guidance on the subsequent accounting for goodwill," a staff member said during the meeting, noting that the issue meets one of the criteria for agenda inclusion, namely "pervasiveness." "Consistent with feedback received in the past, stakeholders indicated a need to simplify guidance on the subsequent accounting for goodwill to reduce the burden of performing goodwill impairment analyses."
Staff outlined five different solutions orpaths to address the goodwill challengein meeting materials. These options include: requiring amortization of goodwill after initial recognition; extending the goodwill amortization approach referred to in the document as the "PCC alternative" to all entities; allowing companies to elect to write off goodwill immediately after initial recognition; enhancing goodwill-related disclosures; or "making targeted simplifications and improvements to the current impairment model."
During the meeting, several board members expressed frustration over previously unrealized project work. FASB Chair Richard Jones noted that current standards are somewhat of a trade-off and expressed support for the amortization approach.
"While I personally do believe amortization is more reasonable from an accounting perspective, I am skeptical that the board can pass that approach," Jones said. "I think what we can actually pass is only providing multiple options and letting the market decide which accounting treatment is best."