Private company reporter - July 16, 2013


Download: Private company reporter - July 16, 2013

The PCC proposed to the FASB an accounting alternative that would exempt nonpublic entities from applying certain VIE guidance. This edition explains the PCC’s proposal, and highlights other recent developments related to private company reporting.

At its July 16 meeting, the Private Company Council (PCC) proposed to the FASB an alternative for applying the variable interest entity (VIE) guidance to common control leasing arrangements. The FASB staff will now draft an Accounting Standards Update (ASU) based on the PCC proposal for consideration by the FASB. If endorsed by the FASB, the draft ASU will be exposed for public comment.

The following is a summary of the alternative proposed by the PCC:

  • At its option, a nonpublic entity would be exempt from applying the VIE model when it is a lessee in a leasing arrangement with a separate entity under common control, provided that substantially all activities between the lessee and the lessor are related to the leasing activity.
  • Nonpublic entities that elect this option would be required to provide additional disclosures, including details about the leasing arrangement, the amount of debt, and other significant liabilities of the lessor, and key terms of the lesseeā€™s explicit interest in the lessor.

The PCC also redeliberated the private company decision-making framework. It reaffirmed many of the decisions previously reached and decided to make some modifications to the framework based on comments received. The framework is expected to be issued in final form during the third quarter of 2013.

This edition of Private company reporter provides further information on the proposed alternative, as well as highlights of other recent developments related to private company reporting.