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The proposals involve accounting for intangible assets acquired in business combinations, goodwill, and certain types of interest rate swaps.
“These proposals are intended to continue to provide users of private company financial statements with decision-useful information, while reducing the costs and complexity for preparers in valuing and accounting for intangible assets acquired in business combinations, goodwill, and certain types of interest rate swaps”, said FASB Chairman Russell G Golden. “We look forward to receiving feedback on the effectiveness of the proposals from private company stakeholders.”
The first proposal—derived from PCC Issue No. 13-01A, 'Accounting for Identifiable Intangible Assets in a Business Combination'—modifies the requirement for private companies to separately recognise fewer intangible assets acquired in a business combination.
The second proposal—derived from PCC Issue No. 13-01B, 'Accounting for Goodwill Subsequent to a Business Combination'—would permit amortisation of goodwill (the residual asset recognised in a business combination after recognising all other identifiable assets acquired and liabilities assumed) and a simplified goodwill impairment model.
The third proposal—derived from PCC Issue No. 13-03, 'Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps'—would give private companies, other than financial institutions, the option to use two simpler approaches to accounting for certain types of interest rate swaps that are entered into by a private company for the purpose of economically converting its variable-rate borrowing to a fixed-rate borrowing.