In our comment letter on the proposed ASU, Accounting for Identifiable Intangible Assets in a Business Combination, a proposal of the Private Company Council, we express concerns that the proposed standard would create a substantial difference in the recognition and measurement of identifiable intangible assets between public and private companies.
We are not convinced that accounting for identifiable intangible assets in a business combination is one of those rare instances where a substantial difference in recognition and measurement between private companies and public companies is justified. Rather, we would be supportive of the FASB undertaking a more comprehensive reconsideration of the existing model for the recognition and measurement of intangible assets in a business combination for all entities.
We recognize that the PCC and, in turn, the FASB may decide to move forward with the proposed standard for private companies only. If that is the case, we have provided specific comments in our letter with respect to the implementation of the proposal. Also, given the fundamental difference that the proposed standard would create in the financial reporting for identifiable intangible assets between private and public companies, it will be impracticable, in many cases, for a private company that applies the proposed standard to retrospectively adjust its financial statements as a public company. As such, transition guidance or an accommodation should be provided.