April 20, 2018
The Private Company Council (PCC) held its regular quarterly meeting on Friday, April 20, 2018. At the meeting, PCC members provided input on the following topics:
- Collaborative Arrangements: PCC members generally supported a proposed Update that would clarify the interaction between Topic 808, Collaborative Arrangements, and Topic 606, Revenue from Contracts with Customers. PCC members noted that differences do not exist between public and private companies in this area, and private companies would welcome a standard to decrease diversity in practice.
- Consolidations—Targeted Improvements to Related Party Guidance for Variable Interest Entities: PCC members reaffirmed their support for a private company alternative proposed in Update on Topic 810. The PCC stated that progress on the private company alternative to VIE guidance should not be delayed by further research on the other amendments in the proposed Update.
- Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is Considered a Service Contract: The PCC discussed the proposed Update resulting from the consensus-for-exposure reached at the January 18, 2018 EITF meeting. PCC Members supported the proposed Update.
- Share-Based Payments: PCC members discussed potential private company accounting alternatives for recognizing and measuring equity-classified share-based payment awards. The discussion focused on whether the current accounting for equity-classified awards provides users of private company financial statements with relevant information. The PCC directed the FASB staff to conduct outreach regarding this issue.
- Revenue Recognition: The PCC provided input on two of the private company-specific revenue recognition issues outlined in a comment letter submitted by the AICPA Technical Issues Committee (TIC) and Center for Plain English Accounting (CPEA). The PCC requested that the FASB staff conduct outreach regarding the cost and complexity of applying the new revenue guidance to out-of-pocket costs. The PCC and FASB staff also discussed potential changes to the pattern of revenue recognition in some short-cycle manufacturing contracts.
PCC Meeting Recaps are provided for those interested in following the activities of the PCC. Official positions of the PCC and the FASB are reached only after extensive due process & deliberations. More details on the PCC’s input on the FASB’s projects can be found within the meeting minutes, which will be published on the PCC website in the coming weeks.