U.S. GAAP Update to Offer Accounting Alternative for Private Companies
Last month, the Financial Accounting Standard Board (“FASB”) approved a proposal that would offer private companies an easier method to adopt special accounting alternatives from U.S. GAAP. Scheduled to be published in early 2016, the proposal is in response to the Private Company Council’s (“PCC”) calls for accounting changes.
In September, the FASB issued Proposed Accounting Standards Update No. PCC-15-01, Intangibles—Goodwill and Other (Topic 350): Business Combinations (Topic 805): Consolidation (Topic 810): Derivatives and Hedging (Topic 815): Effective Date and Transition Guidance — a Proposal of the Private Company Council. The proposal eliminates the effective dates for the following accounting alternatives:
- ASU No. 2014-18, Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination;
- ASU No. 2014-07, Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements;
- ASU No. 2014-02, Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill; and
- ASU No. 2014-03, Derivatives and Hedging (Topic 815): Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps—Simplified Hedge Accounting Approach.
Removal of the effective dates gives private companies an unconditional one-time option to elect an accounting alternative without the requirement of a “preferability assessment” test, as stated in U.S. GAAP.
Topics: Accounting Standards Update "ASU", Business Combinations (Topic 805), Derivatives and Hedging (Topic 815), Financial Accounting Standards Board "FASB", Private Company Council "PCC", U.S. GAAP