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Recap of Private Company Council’s December Meeting

At its December 8 meeting, the Private Company Council provided feedback on the following topics: Customer’s Accounting for Implementation, Setup, and Other Upfront Costs (Implementation Costs) Incurred in a Cloud Computing Arrangement That Is Considered a Service Contract: Council members declared that implementation costs are to be capitalized in such arrangements, except fees for a cloud computing arrangement that are considered a service contract. Financial Performance Reporting: Council members examined the results of Financial Accounting Standards Board (“FASB”) staff’s research on private company financial statements, and the possible impact disaggregation of performance information may have on the private company sector.. Read More.

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PCC Members Want Consistency on Cloud Computing Guidance

With the Financial Accounting Standards Board (“FASB”) continuing to research ways to improve guidance for cloud computing accounting, private organizations and their accountants are pushing for a simplified approach. At a September 19 meeting, Private Company Council (“PCC”) representatives expressed to the FASB their desire for the accounting guidance for implementation costs related to setting up cloud-based business software packages to be consistent with the board’s guidance for similar software licenses. Beth van Bladel, a PCC member and director of CFO for Hire LLC, argued in favor of cloud computing being treated similarly as software licensing. van Bladel said she preferred that companies decide on how to organize the contractual agreement based on the terms and. Read More.

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Four New Private Company Council Members Appointed

On Tuesday, the Financial Accounting Foundation’s Board of Trustees appointed the following new members to the Private Company Council (“PCC”): Jeremy Dillard, partner with Singer Lewak, LLP Michael Minnis, associate professor at the University of Chicago Booth School of Business Dev Strischek, retired senior vice president and senior credit policy officer, corporate risk management at SunTrust Banks, Inc. Frank Tarallo, chief executive officer at Theragenics Corporation Dillard, Stischek and Tarallo will replace Messrs. Jeff Bryan, Steve Brown and Larry Weinstock, whose terms on the PCC conclude December 31, 2017. In addition, the appointment of Minnis increases the number of PCC. Read More.

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FASB Issues Update on Certain Financial Instruments with Liabilities and Equity Characteristics

Following recommendations from the Private Company Council, the Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update No. 2017-11, Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I simplifies accounting for select financial instruments with down round features, a rule in an equity-linked financial instrument or embedded feature that offers a downward adjustment. Read More.

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Highlights from the Private Company Council’s Tuesday Meeting

The following is a recap of Financial Accounting Standards Board (“FASB”) projects discussed at Tuesday’s Private Company Council (“PCC”) meeting: Disclosure Framework. Numerous PCC members expressed support for the project, particularly the inventory exposure draft. The PCC also provided feedback on various portions of the project. Financial instruments—Hedge Accounting. Many PCC members favor the standard, including guidance to give private companies additional time to disclose hedge effectiveness. Liabilities and Equity—Targeted Improvements. Feedback received on the Exposure Draft was discussed, as well as the FASB’s research on an alternative to help streamline financial instruments accounting with “down round” features. The FASB was encouraged. Read More.

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Private Company Council, FASB Members Meet to Discuss Projects

Private Company Council (“PCC”) members gathered Tuesday to discuss the Financial Accounting Standards Board’s (“FASB”) ongoing projects. With FASB staff members also on hand to provide updates, the PCC provided feedback on the following matters: Financial instruments—hedge accounting. During talks on the FASB’s effort to simplify hedge accounting, the PCC asked the FASB to make a decision on whether to offer an exception for private companies when fulfilling their hedge documentation and effectiveness testing requirements. Consolidation reorganization and improvements. Several PCC members still want private companies under common control to be exempt from the variable interest entity guidance under Topic. Read More.

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