15 Dec New Rules for Reporting Goodwill and Intangibles

Earlier this year, we shared news that Canada’s Accounting Standards Board (AcSB) was considering changes to make it easier for private businesses to handle goodwill and intangible assets in their financial statements. Now, the AcSB has released their official proposal, and it includes some big changes.

Quick Refresher: What’s This About Again?

When a business buys another business, it gets more than just inventory and equipment. It might also get things like a brand name, a customer list, or a license, things you can’t touch but that still have value. These are called intangible assets.

If the buyer pays more than the total value of all those things, the extra amount paid is called goodwill. Right now, the accounting rules for private businesses say that companies must identify, list, and value these intangible assets separately and test goodwill for losses each year. This can be a costly and complicated process.

The Proposed New Accounting Rules

The AcSB’s proposal involves two big changes:

1.    Let Companies Bundle Intangibles into Goodwill

Instead of forcing companies to identify and measure every single intangible asset, the proposal would permit them to include all intangibles in the goodwill bucket. If this method is chosen, then they must use this same method every time.

This would:

• Cut down on expensive third-party valuation reports;
• Save time during reviews and audits; and
• Reduce complexity for small business owners and accountants.

However, there’s a catch.

2.    If You Bundle, You Must Amortize Goodwill

Companies that choose to use the goodwill “bundle” approach must amortize (spread the cost of) goodwill over time:

• The default period is five years, straight-line (an even amount each year).
• If a company can prove a different time frame is more appropriate, they may use up to 10 years to amortize the goodwill.

Amortization will generally replace the current practice of testing goodwill for impairment annually, unless there are indicators of impairment.

What If You Don’t Want to Bundle?

That’s okay, the AcSB isn’t forcing anyone to change. If a company wants to keep listing intangible assets separately, it can. And if they do that, they also get to choose whether to amortize goodwill or keep testing it for impairment every year.

So, in short:

New Disclosure Rules

Companies that choose to bundle everything into goodwill won’t be off the hook completely. They’ll still need to disclose (in the year of acquisition only) a general description of any important intangible assets (like a well-known brand name or key customer contract) that were rolled into goodwill. No numbers are needed here, just a brief explanation.

When Will These Rules Take Effect?

These proposals are not final yet. They are open for public comment until January 31, 2026. The AcSB expects to finalize the rules by mid-2027, with the standards becoming official for fiscal years starting January 1, 2029.Early adoption will be allowed.

Final Thoughts

This proposal is the result of feedback from business owners, accountants, lenders, and others who asked for simpler rules without sacrificing clarity. The AcSB is aiming to balance cost, complexity, and the need for useful information. We think it is a good change and look forward to implementing it with clients once it becomes available.