FASB Eases Private Company Rules on Goodwill and Interest Rate Swaps by Hector E. Aguililla

Posted on January 21, 2014 by Hector Aguililla

On January 16, after having endorsed the consensuses of the Private Company Council (PCC), the Financial Accounting Standards Board (FASB) issued alternatives to help private companies account for goodwill and interest rate swaps in a more simplified and less costly manner than what is currently required under U.S. GAAP.

Goodwill is an intangible asset represented by the gap that exists between the purchase price and fair market value of a company and its assets and liabilities. Under the new FASB rules, private firms may amortize, or reduce, goodwill on a straight-line basis over a period of 10 years or less. Additionally, the new rules allow private companies to conduct a simplified impairment test to determine the need for write-downs on goodwill only when a triggering occurs and indicates the business’s fair value is below its carrying amount. Public companies must test for impairment each year.

The new rules also provide private entities, other than financial institutions, with the ability to use a simplified hedge accounting approach to account for interest rate swaps entered into when converting variable-rate interest payments to fixed-rate payments.

Consult the professionals at Berkowitz Pollack Brant to determine the best ways public and private companies may comply with changing accounting and audit regulations.


About the Author: Hector E. Aguililla, CPA, is associate director of audit and attest services with Berkowitz Pollack Brant. For more information, call (305) 379-7000 or email