TPAs address new private company accounting alternatives

BY KEN TYSIAC

Three new AICPA Technical Questions and Answers (TPAs) provide nonauthoritative guidance regarding application of some accounting alternatives FASB issued in January for private entities that are not classified as public business entities, as defined in Accounting Standards Update (ASU) No. 2013-12.

AICPA Technical Questions and Answers (TPAs) 9150.32–.33 and 9160.29 also provide nonauthoritative guidance on how application might affect a compilation, review, or audit engagement and related reports.

The accounting alternatives are included in FASB ASU No. 2014-02, Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill, and ASU No. 2014-03, Derivatives and Hedging (Topic 815): Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps—Simplified Hedge Accounting Approach.

ASU No. 2014-02 permits a private company to subsequently amortize goodwill on a straight-line basis over 10 years, or less if the company demonstrates that another useful life is more appropriate. The alternative also permits a private company to apply a simplified impairment model to goodwill.

ASU No. 2014-03 gives private companies except for financial institutions an option to use a simplified hedge accounting approach to account for interest rate swaps that are entered into for the purpose of economically converting variable-rate interest payments to fixed-rate payments.

SPONSORED REPORT

How the election may affect taxation of business income

This report summarizes recent proposals to reform the U.S. business income tax system and considers the path to enactment of any such legislation.

VIDEO

How to Excel pivot a general ledger

The general ledger is a vast historical data archive of your company's financial activities, including revenue, expenses, adjustments, and account balances. J. Carlton Collins, CPA, shows how to prepare data for, and mine data with, PivotTables.

QUIZ

Did you follow 2016’s biggest accounting news?

CPAs will remember 2016 as a year of new standards and new faces. How well did you follow the biggest accounting events? The 7 questions in this quiz will help you find out