NEWS RELEASE 07/01/13
FASB ISSUES THREE PRIVATE COMPANY COUNCIL PROPOSALSNorwalk, CT, July 1, 2013—The Financial Accounting Standards Board (FASB) today issued for public comment three proposals that address private company stakeholder concerns raised about the relevance and complexity of three aspects of U.S. Generally Accepted Accounting Principles (GAAP). The proposals involve accounting for intangible assets acquired in business combinations, goodwill, and certain types of interest rate swaps. Stakeholders are asked to provide comments on the three Exposure Drafts by August 23, 2013.
“These proposals are intended to continue to provide users of private company financial statements with decision-useful information, while reducing the costs and complexity for preparers in valuing and accounting for intangible assets acquired in business combinations, goodwill, and certain types of interest rate swaps,” said FASB Chairman Russell G. Golden. “We look forward to receiving feedback on the effectiveness of the proposals from private company stakeholders.”
The first proposal—derived from PCC Issue No. 13-01A, Accounting for Identifiable Intangible Assets in a Business Combination—modifies the requirement for private companies to separately recognize fewer intangible assets acquired in a business combination.
The second proposal—derived from PCC Issue No. 13-01B, Accounting for Goodwill Subsequent to a Business Combination—would permit amortization of goodwill (the residual asset recognized in a business combination after recognizing all other identifiable assets acquired and liabilities assumed) and a simplified goodwill impairment model.
The third proposal—derived from PCC Issue No. 13-03, Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps—would give private companies, other than financial institutions, the option to use two simpler approaches to accounting for certain types of interest rate swaps that are entered into by a private company for the purpose of economically converting its variable-rate borrowing to a fixed-rate borrowing.
The effective dates will be determined after the FASB and the PCC consider stakeholder feedback on the Exposure Drafts. Following receipt of public comments, the PCC and the FASB will discuss feedback at the September 30 to October 1, 2013 PCC meeting. The PCC will then consider changes to the original proposals and take a final vote before submitting to the FASB for a final decision on endorsement.
During the exposure period, the FASB staff will research and analyze whether the proposals should be extended to public companies or not-for-profit organizations— which will be discussed with the Board at a future meeting.
Comments can be provided using the electronic feedback form available on the FASB website or emailed to firstname.lastname@example.org, referencing File Reference No. PCC-13-01A, No. PCC-13-01B, or No. PCC-13-03 by August 23, 2013. Written comments should be addressed to:
File Reference No. PCC-13-01A, No. PCC-13-01B, or No. PCC-13-03
Financial Accounting Standards Board
401 Merritt 7, PO Box 5116
Norwalk, CT 06856-5116
More information on the proposals, including a FASB In Focus detailing the proposals, are available on the FASB website at www.fasb.org and on the PCC website.
About the Private Company Council (PCC)
The PCC determines alternatives to existing nongovernmental U.S. GAAP to address the needs of users of private company financial statements, based on criteria mutually agreed upon by the PCC and the FASB. Before being incorporated into U.S. GAAP, PCC recommendations will be subject to a FASB endorsement process. The PCC also serves as the primary advisory body to the FASB on the appropriate treatment for private companies for items under active consideration on the FASB’s technical agenda.
About the Financial Accounting Standards Board
Since 1973, the Financial Accounting Standards Board hasbeen the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at www.fasb.org.