Norwalk, CT—October 1, 2013—The Private Company Council (PCC) today voted to finalize two alternatives within U.S. Generally Accepted Accounting Principles (GAAP) for accounting for interest rate swaps and, separately, accounting for goodwill in a business combination for private companies.

The Financial Accounting Standards Board (FASB) will discuss the proposed alternatives and also consider the applicability of these alternatives to publicly traded companies and not-for-profit organizations in the coming weeks. If the FASB decides to endorse the alternatives, they will be issued as final Accounting Standards Updates.

The first proposed GAAP alternative—Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps—would give private companies, other than financial institutions, the option to use a simplified hedge accounting approach to account for certain types of interest rate swaps that are entered into for the purpose of economically converting variable rate interest payments to fixed-rate payments. The alternative would also extend the exemption from certain fair value disclosures to private companies for which such swaps are their only derivatives.

The second proposed GAAP alternative—Accounting for Goodwill Subsequent to a Business Combination—would permit a private company to subsequently amortize goodwill over a period of ten years, or less under certain circumstances, and to apply a simplified impairment model to goodwill. Goodwill is the residual asset recognized in a business combination after recognizing all other identifiable assets acquired and liabilities assumed.

“The PCC and the FASB received significant stakeholder input on the proposals on accounting for interest rate swaps for private companies and for goodwill in a business combination,” said PCC Chairman Billy M. Atkinson. “Based on this input, the PCC was able to finalize two proposals addressing issues users, preparers, and public accountants of private company financial statements have told us are a priority. We look forward to receiving the FASB’s endorsement on the alternatives in the coming weeks so that 2013 implementation is possible.”

The proposed GAAP alternative on interest rate swaps represented a change from the original proposal. The original proposal enabled private companies to use both a simplified hedge accounting approach and a combined instruments approach to account for certain types of interest rate swaps. The PCC decided to separate the combined instruments approach from the revised proposal and directed the FASB staff to conduct more research on the combined instruments approach for further discussion at a future meeting.

Also discussed at the PCC meeting was the FASB Exposure Draft on PCC Issue No. 13-01A, Accounting for Identifiable Intangible Assets in a Business Combination, which modifies the requirement for private companies to separately recognize fewer intangible assets acquired in a business combination. The PCC directed the FASB staff to conduct more research for further discussion at a future meeting. The PCC and the FASB also discussed and provided input on the FASB’s projects on Leases, Development Stage Entities, and the Definition of a Nonpublic Entity.

During the meeting, which was webcast at, the PCC reminded stakeholders to provide comments on the proposed GAAP alternative, PCC Issue No. 13-02, Applying Variable Interest Entity Guidance to Common Control Leasing Arrangements (formerly FIN 46(R) and FAS 167) by October 14. The PCC and the FASB also announced that the final Private Company Decision-Making Framework is expected to be issued by November.

The next PCC meeting will be held on Tuesday, November 12, 2013. For more information, visit the PCC website.

About the Private Company Council (PCC)

The PCC determines alternatives to existing nongovernmental U.S. GAAP to address the needs of users of private company financial statements, based on criteria mutually agreed upon by the PCC and the FASB. Before being incorporated into U.S. GAAP, PCC recommendations will be subject to a FASB endorsement process. The PCC also serves as the primary advisory body to the FASB on the appropriate treatment for private companies for items under active consideration on the FASB’s technical agenda.

About the Financial Accounting Standards Board

Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at