FAR - Framework, Overview & Statements - Special Purpose Framework - Private Company Council

Question 1

What does the Private Company Council (PCC) do?

Answer 1

Works with the FASB to set accounting standards for private companies.

Question 2

What modification is allowed for private companies related to accounting for goodwill?

Answer 2

The goodwill can be amortized over a period not to exceed 10 years.

Question 3

What modification is allowed for private companies related to accounting for interest rate swaps.

Answer 3

The hedge accounting for a receive variable / pay fixed interest rate swap is simplified. The private company can assume 100% effectiveness and can use settlement value as a practical expedient for fair market value.

Question 4

What is a private company?

Answer 4

A private company is one that is not a public company. The PCC provides a definition of a public company as one that is required to file or furnish financial statements with a regulatory agency related to any type of securities (debt and equity), whether those securities are traded on exchanges or over-the-counter.