Spring 2014 issue of Horizons

FEATURE

instruments approach. At its January 2014 meeting, the PCC voted to discontinue discussion of the combined instruments approach and removed the project from its agenda. Common Control Leasing Arrangements The FASB has also issued Accounting Standards Update (ASU) 2014-07, Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements . This alternative is designed to provide an exemption for private companies from applying current variable interest guidance and instead provide disclosures that users of private company financial statements typically seek. The extant guidance within GAAP for variable interests requires an assessment that could result in requiring the consolidation of the lessor entity with the lessee. In order to qualify to apply the alternative, certain requirements involving the relationship of the private company lessee and the lessor entity must be met. Those requirements include common control of the two entities, an existing lease arrangement between the two entities, substantially all of the activity between the two entities is related to leasing activity, and the leased asset sufficiently collateralizes the lessor entity’s debt. If the alternative is elected, the electing entity is required to provide additional disclosures about the leasing arrangement, the debt of the lessor and any details about the lessee’s explicit interest in the lessor. Other Issues Being Studied By The PCC In addition to the three accounting standards updates described previously, the PCC continues to work on additional issues. Intangible Assets in a Business Combination The PCC has issued an Exposure Draft related to Issue No. 13-01A— Accounting for Identifiable Intangible Assets in a Business Combination , which would modify requirements for private companies in order to separately recognize fewer intangible assets acquired in a business combination.

RubinBrown SEMINAR Private Company Financial Reporting: Relief is Here

Join RubinBrown and AICPA executives at this special event where we explore recent actions taken by the PCC and the AICPA. ∙ Learn about the PCC’s mission and hear about projects on its agenda ∙ Gain an understanding of recent updates to GAAP as a result of the PCC

∙ Explore the differences of FRF for SMEs versus GAAP

∙ Understand what type of companies are good candidates to apply FRF for SMEs ∙ Hear what bankers and their regulators are saying about these new standards

Presenting with RubinBrown experts will be: ∙ Dan Noll, AICPA Accounting Standards Director (presenting in St. Louis)

∙ Robert Durak, AICPA Director of Private Company Financial Reporting (presenting in Kansas City & Denver)

St. Louis: May 16, 2014 | 7:30-10 a.m. | RubinBrown Center

Kansas City: May 20, 2014 | 7:30-10 a.m. | DoubleTree Hotel

Denver: May 21, 2014 | 7:30-10 a.m. | RubinBrown Center

Register online at www.RubinBrown.com

The accounting alternative also extends the exemption from certain fair value disclosures to private companies for which such swaps are their only derivatives. This alternative represents a change from the PCC’s 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

page 28 | horizons Spring 2014