The Financial Accounting Standards Board (FASB) has issued two proposals that affect accounting after a business combination. The proposals are derived from the FASB’s Private Company Council (PCC) Issue No. 13-01A and Issue No. 13-01B and attempt to address concerns about relevance and complexity in the application of Generally Accepted Accounting Principles (GAAP) to private companies.
The PCC Issue No. 13-01A, Accounting for Identifiable Intangible Assets in a Business Combination, would allow private companies to separately recognize fewer intangible assets acquired in a business combination.
The PCC Issue No. 13-01B, Accounting for Goodwill Subsequent to a Business Combination, has the following provisions:
- Goodwill could be amortized over a short useful life, not to exceed 10 years.
- Impairment testing would only need to be performed after a triggering event occurs and would eliminate the complicated Step 2 of the goodwill impairment test under ASC 350-20.
- Impairment would be assessed at the entity level instead of the reporting-unit level.
FASB also released a proposal regarding certain types of interest rate swaps. Comments on the three exposure drafts are due by August 23, 2013 and will be discussed by the FASB and PCC at the PCC meeting beginning September 30, 2013. The PCC will then make any modifications to the original proposals, take a final vote and submit to the FASB for a final decision on endorsement.
Consider discussing your needs with Schneider Downs’ business advisors who perform business valuations and goodwill impairment analysis, among other services. Please contact Joel Rosenthal of the Schneider Downs Business Advisory Group at 412-697-5387 or email him at firstname.lastname@example.org for assistance.
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