At its meeting with the FASB this week, the Private Company Council (PCC) discussed the following items:

• Applying variable interest entity guidance to common-control leasing arrangements — The PCC discussed the FASB staff’s outreach regarding circumstances in which a private company consolidates another entity as a result of the implicit variable interest guidance on related-party leasing arrangements. After deliberating, the PCC voted to give private companies an optional exemption from applying the variable interest entity consolidation guidance in ASC 810¹ to certain interests in related entities that are under common control. Companies that apply the exception would be required to disclose detailed information about the common-control leasing arrangement. A proposal will be drafted immediately and exposed for comment after being approved by the PCC and endorsed by the FASB.
• Private-company decision-making framework (PCDMF) — The PCC discussed the feedback received on the updated Invitation to Comment² on the PCDMF. The PCC and FASB voted to approve minor adjustments to the PCDMF, such as a refinement in how accounting relief from industry-specific guidance would be evaluated. It was also agreed that (1) initial adoption of a private-company alternative would not require a preferability assessment and (2) guidance on subsequent switches to or from alternatives would be provided in each individual proposal. A revised PCDMF will be issued later this summer, after PCC and FASB approval.
• Development-stage entities (DSEs) — The FASB staff presented the results of its outreach on the current requirements for a DSE to provide cumulative information on income and cash flows since its inception. In general, preparers indicated that such information can be costly to prepare, and users questioned its relevance. Because constituents in private and public companies shared these sentiments, the FASB decided to add a project to its agenda to consider eliminating the cumulative disclosure requirements and evaluate whether alternative disclosures would be useful to users.
• Other project updates — The FASB staff summarized for the PCC the status of several FASB projects, including leases and financial instruments. The PCC discussed private-company concerns specific to the projects and considered how it would express its feedback to the FASB on these projects going forward. The PCC decided that meeting minutes would convey its feedback on FASB agenda items rather than individual comment letters.

The PCC announced that it will hold a public roundtable this November to solicit input from private-company stakeholders on future initiatives of the PCC. For further details on the roundtable and the items above, see the FASB’s News Release.