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PCC Finalizes Two FASB Proposals

By MarksNelson on January 16, 2014 in Articles, Assurance Services, Don Towle CPA, CGMA, Services
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Don Towle tailors accounting and management services to help his clients grow and realize their goals. Learn more about MarksNelson's accountants.During 2013 the Financial Accounting Standards Board (FASB) issued for public comment five proposals from the Private Company Council (PCC) for alternatives to existing nongovernmental U.S. GAAP. Established in 2012, the goal of the PCC is to improve the process for setting accounting standards for privately held companies.  The PCC has finalized two of these five proposals (PCC Issues 13-01B and 13-03A) and sent them to the FASB for endorsement.

  • PCC Issue No. 13-03A, “Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps” provides two simpler approaches to accounting for swaps that are entered into for the purposes of economically converting variable-rate borrowing to fixed-rate borrowing. Under both approaches, the combined instruments approach and the simplified hedge accounting approach, the periodic income statement charge for the interest expense would be similar to the amount that would result if the entity had directly entered into a fixed rate borrowing, instead of a variable-rate borrowing and a swap.
  • PCC Issue No. 13-01B, “Accounting for Goodwill Subsequent to a Business Combination”, allows for amortization of goodwill on a straight-line basis over the useful life of the primary asset acquired in a business combination, not to exceed 10 years. It also allows for goodwill to be tested for impairment only when a triggering event occurs that would indicate that the fair value of an entity may be below its carrying amount.

The above proposals were discussed at the FASB’s November 25, 2013 meeting and both were endorsed by the FASB. These private company GAAP alternatives are expected to be issued as final Accounting Standards Updates in January 2014.

The topics for the proposals still outstanding are as follows:

  • Accounting for Identifiable Intangible Assets in a Business Combination (PCC Issue No. 13-01A)
  • Applying Variable Interest Entity Guidance to Common Control Leasing Arrangements (PCC Issue No. 13-02)
  • Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps-Combined Instruments Approach (PCC Issue No. 13-03B)

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MarksNelsonView all posts by MarksNelson
MarksNelson LLC works with clients to help safeguard and grow their businesses. Our ultimate goal is to help our clients to Move Forward. The firm provides Assurance, Accounting Services and Business Advisory, Business Valuation, Consulting, Cost Segregation, Employee Benefit Plan Audits, Litigation Support, Forensic Accounting, International Tax, State and Local Tax and Tax planning, advisory and compliance services. MarksNelson is a member of The Leading Edge Alliance, the second-largest international professional association of independently owned accounting and consulting firms, serving clients who need additional resources on a national or international level. MarksNelson has significant accounting and business advisory experience in the auto dealership, construction, insurance, manufacturing, distribution and real estate sectors. The firm was named among the 2014 Best Accounting Firms for Leadership Equity by the 2014 Accounting MOVE Project for its dedication to gender equity.