On July 29th, 2026, the Financial Accounting Standards Board (FASB) officially voted to add a project to its technical agenda to make targeted improvements to goodwill impairment testing. This vote stems from feedback from FASB’s 2025 agenda consultation invitation to comment. Its goal is to drastically reduce costs, complexity, and audit burdens for public companies, private companies, and not-for-profit entities that do not currently use the goodwill amortization alternative.
The FASB is looking to overhaul the core mechanics of ASC 350 through two major structural changes that would fundamentally reshape how companies evaluate goodwill. Under current guidance, companies generally perform annual goodwill impairment testing at the reporting unit level, even when no indicators of impairment exist. Under the new proposal, testing would become a strict event driven. Companies would only be required to perform a quantitative impairment test if a qualitative triggering event indicates that a loss is more likely than not. In addition, rather than testing goodwill at the highly granular reporting unit level, companies would test goodwill at the higher operating segment level.
The proposed changes aim to bridge the gap between rigorous accounting oversight and commercial reality. By shifting to the operating segment level, data collection and analysis would become significantly simpler. This change would also better align impairment reviews with the operational information that executive leadership uses to manage the business.
For now, corporate accounting teams should not alter their valuation models. Because the FASB has only recently added this project to its technical agenda, the existing requirements under ASC 350 remain fully in effect. Companies must continue to perform their annual goodwill impairment tests at the reporting unit level unless and until the guidance changes. The next major milestone will be the publication of a formal Exposure Draft by the FASB staff. Once released, stakeholders will have an opportunity to provide feedback before any targeted improvements are finalized and incorporated into authoritative accounting guidance.