Tax & Assurance Guidance

VIE Consolidation Exemption and Other Accounting Updates

Posted on February 25, 2014 by

Dave Van Damme

Dave Van Damme

Share This

Share on facebook
Share on twitter
Share on linkedin
Share on email

Private Company Council – Generated US GAAP Updates

VIE Consolidation Exemption

On February 19, 2014, the Financial Accounting Standards Board (“FASB”) endorsed the Private Company Council (“PCC”) initiated accounting alternative that will offer private companies an exemption from applying the variable interest entity (“VIE”) consolidation model to certain common control leasing arrangements.

The FASB expects to issue the final standard in late March of 2014, and early adoption will be available for private companies’ financial statements ready for issuance immediately when the final standard is issued.

What does this mean to you?

It is anticipated that this exemption to the VIE consolidation model will provide relief to many private companies from the costly and unnecessary consolidated presentation of certain real estate leasing entities with their related party operating entities.

Recently Issued US GAAP Updates (PCC Related)

On January 16, 2014, the FASB issued two updates to US GAAP, ASU 2014-02 Intangibles – Goodwill and Other (Topic 350): Accounting for Goodwill and ASU 2014-03, Derivatives and Hedging (Topic 815): Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps – Simplified Hedge Accounting Approach.

The amendments in both ASU 2014-02 and 2014-03 are effective for annual periods beginning after December 15, 2014. Earlier application is permitted.

What does this mean to you?

The provisions of (Topic 350): Accounting for Goodwill allows a private company to amortize goodwill on a straight-line basis over 10 years, or less if appropriate. The requirement for impairment testing of goodwill is expected to be less frequent.

The provisions of (Topic 815): Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps – Simplified Hedge Accounting Approach will result in income statement charges for interest expense to be similar to the amount that would result if the entity had directly entered into a fixed-rate borrowing instead of a variable-rate borrowing and a swap agreement. These provisions remove the requirement to have hedge documentation in place at the date of the hedge inception as required by current US GAAP. The complexity of the documentation requirements have precluded many private companies from adopting hedge accounting and caused significant income statement volatility. In addition, the requirements to include the fair value footnote disclosures, often considered lengthy and confusing, are not required for swaps adopting these accounting provisions.

Financial Reporting Framework for Small and Medium Sized Entities (“FRF for SMEs”) Issued by the AICPA

The FRF for SMEs issued by the AICPA in June of 2013 is an “Other Comprehensive Basis of Accounting” framework available to non-public entities. The FRF for SMEs framework provides relief to privately held companies from many complex, onerous, and costly accounting requirements and disclosures. We have assisted several of our clients adopt the FRF for SMEs framework with very successful results. Clients and lenders have enjoyed the ease of analysis provided by the concise and transparent presentation.

How can we help you?

Your Clayton & McKervey advisor and engagement team are available to guide you through the various accounting alternatives available and help you determine the most beneficial financial statement presentation for your needs today and in your future.

Dave Van Damme


Dave leads the advisory & assurance practice and is well known inside and outside the firm for being both engaged & positive.

Related Insights

Tax & Assurance Guidance

Foreign Tax Withholding: What You Need to Know

Posted on April 26, 2022 by

Rob Cheyne
Making service payments to a foreign person is a common cross-border transaction. U.S. taxpayers need to be aware of the applicability of withholding tax and related reporting requirements to ensure they comply and avoid unintended consequences. A U.S. payor must collect withholding tax and remit it to the IRS in the case it is applicable.

Tax & Assurance Guidance

SALT Relief for Partners and S Corps

Posted on February 23, 2022 by

Miroslav Georgiev
With small businesses supporting nearly 47% of U.S. employees, states have been advocating for pass-through entities, operating partnerships and S corporations that have been harshly impacted by the Tax Cuts and Job Act ‘s state and local taxes deduction limit. Recent legislative activity is finally providing relief for many of these businesses. 

Tax & Assurance Guidance

IRS Provides Relief on K-2 and K-3

Posted on February 17, 2022 by

Margaret Amsden
In an attempt to provide more transparency with regard to reporting of foreign activity and/or information to foreign owners, the IRS came out with two new forms: Schedule K-2 (an addendum to the Schedule K) and Schedule K-3 (an addendum to the Schedule K-1). Learn about the latest K-2 and K-3 reporting requirements issued by the IRS.

Sign up for our newsletters

Get general business and industry-specific news and knowledge straight from our accounting specialists.

The Sound of Automation Podcast

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Insights & Perspectives

The Sound of Automation: Looking ahead to CSIA 2022

In this episode we talk with Lisa Richter, Director of Industry Outreach and Growth at Control System Integrators Association (CSIA) . Lisa and Bryan look ahead to the CSIA Executive conference taking place in Denver, CO on June 27-30, 2022 and share with listeners what to expect, who will be there, and the discussion panel topics focusing on this years’ theme “The Future of Work”. 

Read More

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Skip to content