News highlights for March 2014


The first two GAAP alternatives created by the Private Company Council (PCC) were released by FASB, giving private companies new options for possible cost savings in their financial reporting.

FASB released Accounting Standards Updates describing the alternatives. They are:

  • An exemption for private companies from the requirement to annually perform impairment testing for goodwill subsequent to a business combination. The standard is available at tinyurl.com/kuu9lwu.
  • A simplified hedge accounting approach for certain interest-rate swaps that private companies other than financial institutions enter to convert variablerate debt to fixed-rate debt. Private companies whose only derivatives are such swaps also will be relieved of certain fair value disclosures. The standard is available at tinyurl.com/q5f7qja.


“These two accounting standards address issues that private-company stakeholders have told us are priorities,” said FASB Chairman Russell Golden.

Each GAAP alternative has the potential to bring significant cost savings to private companies, experts say. Those that adopt the goodwill alternative will have to test for impairment only when a triggering event occurs that would indicate that the fair value of an entity or reporting unit may be below its carrying amount.

The frequency of this trigger should be decreased because private companies that choose the alternative would be required to amortize the book value of goodwill over a period not to exceed 10 years, said Brian Marshall, CPA, a partner in the National Accounting Standards Group for McGladrey LLP.

The simplified hedge accounting exception could be particularly advantageous for private companies that entered into swaps in the past but did not initially choose or properly elect hedge accounting because the exception is allowed for existing swaps as well as new swaps, according to Faye Miller, CPA, a partner in the National Professional Standards Group at McGladrey LLP.

CHECKLIST

Boost your LinkedIn profile

LinkedIn is No. 1 when it comes to business-related social media. Be prepared when an unexpected career opportunity arises by following these tips for keeping your LinkedIn page current.

PRACTICE MANAGEMENT

Millennial women: How to woo a new generation of employees

Ambitious, educated, and tech-savvy, Millennial women make ideal employees. Win them over with flexibility and clear paths to advancement.

PROFESSIONAL ISSUES

Belicia Cespedes: A CPA at 17

Through hard work and determination, Belicia Cespedes earned the credential before she was even eligible to vote.