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ATTN: Private Companies with VIE Leasing Arrangements

Posted by James A. Krupinski, CPA

Apr 3, 2014 2:22:00 PM

Financial Accounting Standards Board (FASB) has adopted the recommendation from the Private Company Council (the PCC) and in March 2014 issued Accounting Standards Update (ASU) No. 2014-07, Consolidation (Topic 810) – Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements (ASU 2014-07). The ASU 2014-07 will be effective for fiscal years beginning after December 15, 2014 and interim periods thereafter, early adoption will also be permitted, including application to any period for which the entity's annual or interim financial statements have not yet been made available for issuance. This allows a private company to adopt ASU 2014-07 in their 2013 financial statements.

ASU 2014-07 affects private companies that are required to consolidate a variable interest entity (VIE) under common control due to a leasing arrangement. A typical example of this would be when a building with a mortgage is held in a separate entity (Lessor) and the operating company, related through common ownership, leases the building from the Lessor and guarantees the mortgage. The Lessor is considered a VIE and typically would require consolidation with the operating company. ASU 2014-07 provides a scope exception to private companies with regards to VIE guidance under accounting principles generally accepted in the United States of America (GAAP) as long as the following requirements are met:

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Topics: gaap, fasb, leasing, vie, asu-2014-07, private companies, pcc, variable interest entity



Private Companies Now Have Alternatives for Goodwill and Interest Rate Swaps Accounting

Posted by James A. Krupinski, CPA

Feb 6, 2014 12:56:00 PM

Financial Accounting Standards Board (FASB) has adopted certain recommendations from the Private Company Council (the PCC) and in January 2014 issued Accounting Standards Update (ASU) No. 2014-02, Intangibles – Goodwill and Other (Topic 350), Accounting for Goodwill a consensus of the Private Company Council (ASU 2014-02) and ASU 2014-03, Derivatives and Hedging (Topic 815): Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps – Simplified Hedge Accounting Approach (ASU 2014-3).  The ASUs will be effective for fiscal years beginning after December 15, 2014 and interim periods thereafter, early adoption will also be permitted, including application to any period for which the entity's annual or interim financial statements have not yet been made available for issuance.   This allows a private company to adopt the ASUs in their 2013 financial statements.

ASU 2014-02 allows private companies to adopt a simplified alternative for the subsequent accounting for goodwill that includes the following:

  • Amortizing goodwill over a period not to exceed 10 years instead of not amortizing it
  • Choosing to test goodwill for impairment at either the entity level or the reporting unit level instead of having to test goodwill at the reporting unit level
  • Testing goodwill for impairment only when there is a triggering event instead of testing it every year
  • Testing and measuring goodwill for impairment by comparing the fair value of the entity (or reporting unit) to its carrying amount instead of performing a two-step goodwill impairment test that requires hypothetical business combination accounting for purposes of measuring an impairment loss

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Topics: goodwill accounting, asu 2014-03, gaap, interest rate swaps, fasb, asu 2014-02





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