Application of PCC exception addressed in not-for-profit panel Q&A


The AICPA Not-for-Profit Entities Expert Panel developed nonauthoritative guidance in response to an accounting alternative for private companies developed by the Private Company Council (PCC).

The guidance is contained in Q&A Section 6140.26 of the AICPA Technical Questions and Answers.

In January 2014, FASB issued a standard that originated with the PCC and exempts private companies from the requirement to annually perform impairment testing for goodwill subsequent to a business combination.

The standard, Accounting Standards Update (ASU) No. 2014-02, Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill (a consensus of the Private Company Council), provides an alternative for private companies, allowing them to amortize goodwill on a straight-line basis over 10 years, or less than 10 years if the entity can demonstrate that another useful life is appropriate.

The guidance developed by the Not-for-Profit Entities Expert Panel is intended for any not-for-profit entity that has a for-profit subsidiary that it consolidates under GAAP. The for-profit subsidiary could adopt the accounting alternative in ASU No. 2014-02 in its stand-alone financial statements, according to the expert panel.

But the for-profit subsidiary is not permitted to use the amortization accounting alternative in the consolidated financial statements, according to the expert panel. This is because the reporting entity is the consolidated not-for-profit entity, which is not currently permitted to adopt the accounting alternative.

SPONSORED REPORT

How to make the most of a negotiation

Negotiators are made, not born. In this sponsored report, we cover strategies and tactics to help you head into 2017 ready to take on business deals, salary discussions and more.

VIDEO

Will the Affordable Care Act be repealed?

The results of the 2016 presidential election are likely to have a big impact on federal tax policy in the coming years. Eddie Adkins, CPA, a partner in the Washington National Tax Office at Grant Thornton, discusses what parts of the ACA might survive the repeal of most of the law.

QUIZ

News quiz: Scam email plagues tax professionals—again

Even as the IRS reported on success in reducing tax return identity theft in the 2016 season, the Service also warned tax professionals about yet another email phishing scam. See how much you know about recent news with this short quiz.