No answer yet for private companies on acquired intangible assets

BY KEN TYSIAC

Accounting for intangible assets in a business combination was one of the first issues the Private Company Council (PCC) attempted to tackle in its mission to simplify accounting for private companies after it was formed in 2012.

But after more than three hours of deliberation Tuesday, an answer remains elusive on that topic, PCC Issue No. 13-01A.

In a tentative vote Tuesday, PCC members initially supported a GAAP exception for private companies proposed by FASB’s staff under which a private company would not separately recognize noncompetition agreements acquired in a business combination.

Additionally, under that proposal, customer-related assets acquired in a business combination would be recognized only if they are capable of being sold or licensed independently from other assets of a business.

But following the tentative vote, some PCC members sounded more skeptical about the proposal during further discussions on the possible exception. The PCC directed FASB’s staff to conduct more research and analysis on scope, to be discussed at the next PCC meeting Sept. 16.

In addition, the PCC discussed:

  • Stock-based compensation. This was an area of interest at recent PCC town hall meetings, council members said. The PCC directed FASB’s staff to conduct more analysis and outreach on the topic as part of its pre-agenda research.
  • Accounting for certain partnership transactions. The PCC directed FASB’s staff to conduct pre-agenda research on the topic. FASB Vice Chairman James Kroeker said the lack of guidance on this subject causes some preparers to look to accounting textbooks to tackle this issue. “There’s not a lot of guidance out there,” Kroeker said.


Ken Tysiac ( ktysiac@aicpa.org ) is a JofA editorial director.

SPONSORED REPORT

Building client loyalty with payroll services

In this report, CPA experts detail their tactics for performing successful payroll services, how to mitigate risk in the process, and the impact payroll can have as a value-added service.

PODCAST

Using drones to enhance audits

Hermann Sidhu, CPA, global assurance digital leader at EY, walks us through EY’s exciting new project to use drones to help audit large warehouses and outdoor inventories.