What accounting standard update provides an accounting alternative for evaluating triggering events related to goodwill for Body Brain Center?
Body_Brain_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
In March 2021, the FASB issued ASU 2021-03, Intangibles—Goodwill and Other (Topic 350): Accounting Alternative for Evaluating Triggering Events. The amendments in this update provide private companies and not-for-profit entities with an accounting alternative to perform the goodwill impairment triggering event evaluation as required in Subtopic 350-20 as of the end of the reporting period, whether the reporting period is an interim or annual period. An entity that elects this alternative is not required to monitor for goodwill impairment triggering events during the reporting period but, instead, should evaluate the facts and circumstances as of the end of each reporting period to determine whether a triggering event exists and, if so, whether it is more likely than not that goodwill is impaired. An entity that does not elect the accounting alternative for amortizing goodwill and that performs its annual impairment test as of a date other than the annual reporting date should perform a triggering event evaluation only as of the end of the reporting period. The Company adopted this alternative to evaluating goodwill effective January 1, 2022.
Source: Item 23 — RECEIPT (FDD pages 43–178)
What This Means (2025 FDD)
According to Body Brain Center's 2025 Franchise Disclosure Document, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2021-03, titled "Intangibles—Goodwill and Other (Topic 350): Accounting Alternative for Evaluating Triggering Events" in March 2021. This update offers an accounting alternative for private companies and not-for-profit entities when evaluating triggering events related to goodwill impairment.
For Body Brain Center franchisees, this means that instead of constantly monitoring for events that might trigger a goodwill impairment assessment during the reporting period (interim or annual), they can choose to evaluate the circumstances at the end of each reporting period. If a triggering event exists, they then determine whether it is more likely than not that the goodwill is impaired.
Body Brain Center adopted this alternative for evaluating goodwill starting January 1, 2022. If a franchisee does not choose this accounting alternative and performs their annual impairment test on a date other than the annual reporting date, they still need to evaluate for triggering events at the end of the reporting period.