FASB endorses private-company alternative to applying VIE guidance
At its meeting today, the FASB voted to endorse for final issuance (subject to certain drafting changes) an accounting alternative proposed by the Private Company Council (PCC) under which a private company lessee that satisfies certain criteria would not be required to apply the variable interest entity (VIE) guidance in ASC 8101 to a lessor entity under common control.
In addition, the Board confirmed its decision to eliminate the example currently codified in ASC 810-10-55-87 through 55-89 of an evaluation of whether a reporting entity has an implicit variable interest in another entity.
The proposed accounting alternative is expected to be effective for annual reporting periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. Early application would be permitted. Entities that elect the alternative would use a full retrospective approach to apply it.
For more information about the activities and proposals of the PCC, see the PCC section of the FASB’s Web site.
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1 FASB Accounting Standards Codification Topic 810, Consolidation.