At its meetings held on September 30 and October 1, 2013, the Private Company Council (PCC) voted to finalize two standards that would provide private companies alternatives for accounting for goodwill and, separately, for a simplified hedge accounting approach for certain interest rate swaps.
One proposed GAAP alternative – Accounting for Goodwill Subsequent to a Business Combination – would allow private companies to amortize goodwill over a period of ten years, or less in certain circumstances. In addition, a simplified impairment model would be applied.
The other proposed GAAP alternative – Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps – would allow private companies that are not financial institutions to use a simplified hedge accounting approach to account for certain interest rate swaps. In addition, the alternative would extend the private company exemption from certain fair value disclosures when such swaps are the company’s only derivative instruments.
The two approved alternatives are now subject to a final endorsement vote by the FASB. If endorsed, the final Accounting Standards Updates (ASUs) would likely be issued before the end of the year to allow for implementation in 2013.
In addition to moving forward with these two alternatives, the PCC directed the FASB staff to conduct additional research on alternatives related to accounting for identifiable intangible assets in a business combination, and also on the combined instruments model for certain interest rate swaps.