The Financial Accounting Standards Board has added a new project to its crowded agenda: the impairment of intangible assets with indefinite lives.
The new project has been added by FASB chair Leslie Seidman in response to feedback that the board has received on another of its projects, its proposed standards for goodwill impairment.
The new project is intended to be a short-term project with the narrow scope of simplifying the manner in which an entity tests other indefinite-lived intangible assets for impairment. However, FASB did not provide a timeline for completion of the new project or how it would fit into the goodwill impairment project.
Separately, FASB received feedback on another of its projects, for insurance contracts, from an insurance industry association, the Group of North American Insurance Enterprises, urging it to make substantial changes in its proposed standards. The insurance industry group asked FASB to consider creating separate models for short-duration non-life insurance contracts and another for long-duration life insurance contracts.
In a letter Tuesday to Seidman, the industry group said investors are satisfied with the current measurement and reporting of short-duration non-life insurance contracts and generally oppose proposals to introduce explicit risk adjustments, discounting and new eligibility requirements. The group said the proposed changes would increase the non-economic volatility of reported results for reasons outside the control of management and make operating performance less comparable and understandable.
It added that the proposed modifications could result in the global insurance industry becoming less attractive as an investment, causing the industry's cost of capital to rise. They noted that the underlying businesses of non-life and life insurers are fundamentally different and should be accounted for using different models.
