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FASB endorses PCC proposal on private company lessees

  • FASB (US Financial Accounting Standards Board) Image
  • PCC (Private Company Council) (mid blue) Image

Aug 07, 2013

At its August 7 meeting, the FASB endorsed the Private Company Council (PCC) Issue No. 13-02, “Applying Variable Interest Entity Guidance to Common Control Leasing Arrangements,” which would allow private company lessees to elect an alternative that would not require it to apply variable interest entity guidance when determining whether to consolidate a lessor entity.

The alternative can only be used if all of the following conditions are met:

  1. The private company and legal entity are under common control.
  2. The private company has a lease arrangement with the legal entity.
  3. Substantially all activities between the private company and the legal entity are related to the leasing activities (including supporting leasing activities) of the legal entity.

Click for Summary Board Decisions (link to FASB website) from the August 7 meeting.

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