Changes They are a Comin’ (To Privately Held Companies)
The Private Company Council (PCC) was created last year by the Financial Accounting Standards Board (FASB) parent organization, the Financial Accounting Foundation. The PCC is charged with the task of creating Generally Accepted Accounting Principle (GAAP) exceptions and modifications for privately held companies.
Progress is made … on May 8th, the PCC proposed its first GAAP differences for privately held companies:
- Relief from separately recognizing certain intangible assets acquired in a business combination.
- Allow amortization of goodwill and use a simplified goodwill impairment model.
- Allow two simpler approaches to accounting for certain types of interest rate swaps when a company intends to economically convert the interest rate on its debt.
The PCC voted to issue an exposure draft for public comment regarding its proposed differences. The FASB will review the exposure draft and a simple majority must approve it before it can be issued for public comment.
The PCC has other GAAP differences on its July agenda as well:
- GAAP differences for applying VIE guidance to common control leasing arrangements.
- Development stage entities.