On June 10, 2013, the FASB voted to endorse three proposals from the Private Company Council (PCC) that would make the following less complex accounting alternatives available to private companies:

• Business combinations — A private company could elect to recognize only those intangible assets arising from noncancelable contract terms or other legal rights; as a result, some items that might otherwise be recognized as intangibles would be combined with goodwill.
• Goodwill — A private company could elect to amortize goodwill. In addition, the goodwill impairment testing requirements for private companies would be simplified; under these requirements, goodwill would be tested (1) only when a triggering event occurs (rather than annually and when a triggering event occurs) and (2) on an entity-wide basis (rather than at the reporting-unit level).
• Interest rate swaps — A private company that enters into an interest rate swap to economically convert its variable-rate borrowing to a fixed-rate borrowing could elect to apply one of two approaches that result in the presentation of periodic interest expense consistent with a fixed-rate borrowing.

The FASB expects to issue exposure drafts for comment by the end of this month and will request that its staff separately assess the applicability of the first two proposals to public companies and not-for-profit organizations.

At the PCC’s upcoming July meeting, the PCC and FASB plan to discuss potential relief to private companies that apply the variable interest entity consolidation model to common control leasing arrangements.

For more information about the PCC, see the FASB’s Web site.