Availability of Private Company Accounting Alternatives Continues to Grow - Martin Hood LLC
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Availability of Private Company Accounting Alternatives Continues to Grow

Availability of Private Company Accounting Alternatives Continues to Grow

The Private Company Council (PCC), established in May 2012, is the primary advisory body to the Financial Accounting Standards Board (FASB) on private company matters. Per the FASB website, the role of the PCC is to advise the FASB on the following matters:


  1. The appropriate accounting treatment for private companies for items under active consideration on the FASB’s technical agenda.
  2. Possible alternatives within GAAP to address the needs of users of private company financial statements.

In December 2015, the FASB endorsed the removal of the effective dates from four GAAP alternatives developed by the PCC. This endorsement opens the door to the drafting of an Accounting Standards Update (ASU) that would formally remove the effective dates. Removing the effective dates would allow private companies to elect these alternatives without having to perform the initial preferability assessment required under Topic 250, Accounting Changes and Error Corrections.


The effective dates would be removed from the following four private company accounting alternatives:

  • ASU No. 2014-02, Intangibles – Goodwill and Other (Topic 350): Accounting for Goodwill: This alternative allows private companies to amortize goodwill on a straight-line basis over 10 years, or less than 10 years if more appropriate.
  • ASU No. 2014-03, Derivatives and Hedging (Topic 815): Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps – Simplified Hedge Accounting Approach: This alternative makes it easier for private companies to use hedge accounting for certain interest rate swaps.
  • ASU No. 2014-07, Consolidation (Topic 810): Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements: This alternative allows private companies to exempt commonly-controlled lessors for consolidation under variable interest entity (VIE) guidance.
  • ASU No. 2014-18, Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination: This alternative allows private companies to recognize fewer intangible assets in a business combination and certain other transactions.


More information can be found in this January 2015 Journal of Accountancy article.