The fourth installment in a series of exposure drafts (EDs) on top-of-the-mind areas for private companies has been issued by the Private Company Council (PCC), which was created by FASB’s parent, the Financial Accounting Foundation. The new ED outlines an alternative within GAAP for applying consolidation guidance to leasing companies under common control.
Key point: The proposed GAAP alternative, Applying Variable Interest Entity Guidance to Common Control Leasing Arrangements (formerly FIN 46(R) and FAS 167), would exempt many private companies from applying variable interest entity (VIE) guidance to lessor companies under common control. A VIE is a company in which controlling financial interest is not established based on a majority of voting rights.
“This proposal is intended to help lenders and other users better align the information used in assessing the financial position of private companies that prepare financial statements,” said FASB Chairman Russell G. Golden. “We look forward to receiving feedback on the effectiveness of the proposal from private company stakeholders.” Comments are due Oct. 14, 2013.
Recently, the PCC issued three other proposals designed to address the concerns of private companies about accounting for intangible assets acquired in business combinations, goodwill, and certain types of interest rate swaps (see the July 17 BV Wire)