FASB endorses PCC alternatives for goodwill and interest rate swaps

BVWireIssue #135-3
December 17, 2013

The Financial Accounting Standards Board has voted to endorse the first two accounting standards previously approved by the Private Company Council (PCC). The final standards will provide private companies with: (1) an alternative accounting model for goodwill; and (2) a simplified hedge accounting approach for qualifying interest rate swaps. The goodwill alternative, Accounting for Goodwill Subsequent to a Business Combination, allows a private company to amortize goodwill over a period of 10 years, or less under certain circumstances, and to apply a simplified impairment model to goodwill.

Also, the FASB voted to add a project to its technical agenda to consider alternatives to the existing goodwill impairment model for public companies and not-for-profit entities. These alternatives include an amortization model, a simplified impairment model without amortization, or a direct write-off of goodwill.

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