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.
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
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
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
More information on the proposals, including a FASB In
Focus detailing the proposals, are available on the FASB website at http://www.fasb.org/
and on the PCC website.
About the Private Company Council (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
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 http://www.fasb.org/.