The Private Company Council voted at a meeting on Tuesday to finalize two alternatives within U.S. GAAP, for accounting for interest rate swaps, and for accounting for goodwill in a business combination for private companies. The two alternatives will now go to the Financial Accounting Standards Board for discussion and possible endorsement.

The proposed GAAP alternative for accounting for interest rate swaps would give private companies other than financial institutions the option to use a simplified hedge accounting approach to account for certain types of interest rate swaps that are entered into for the purpose of economically converting variable rate interest payments to fixed-rate payments. The alternative would also extend the exemption from certain fair value disclosures to private companies for which such swaps are their only derivatives.

The second proposed alternative, for accounting for goodwill after a business combination, would permit a private company to subsequently amortize goodwill over a period of 10 years, or less under certain circumstances, and to apply a simplified impairment model to goodwill. 

“The PCC and the FASB received significant stakeholder input on the proposals on accounting for interest rate swaps for private companies and for goodwill in a business combination,” said PCC Chairman Billy Atkinson in a statement. “Based on this input, the PCC was able to finalize two proposals addressing issues users, preparers, and public accountants of private company financial statements have told us are a priority. We look forward to receiving the FASB’s endorsement on the alternatives in the coming weeks so that 2013 implementation is possible.”

The proposed GAAP alternative on interest rate swaps represents a change from the original proposal, which would have 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. 

Also discussed at the meeting was the FASB Exposure Draft on PCC Issue No. 13- 01A, Accounting for Identifiable Intangible Assets in a Business Combination, which modifies the requirement for private companies to separately recognize fewer intangible assets acquired in a business combination. The PCC directed the FASB staff to conduct more research for further discussion at a future meeting. The PCC and the FASB also discussed and provided input on the FASB’s projects on leases, development-stage entities, and the definition of a nonpublic Entity.

The next PCC meeting will be held on Tuesday, Nov. 12, 2013. For more information, visit the PCC Web site.

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