The Private Company Council, the standard-setter for privately held companies, voted Tuesday to finalize an alternative that would exempt private companies from separately recognizing and measuring non-competition agreements and customer-related intangible assets that are not capable of being sold or licensed independently in a business combination.
The PCC operates under the auspices of the Financial Accounting Foundation in conjunction with its sister organization, the Financial Accounting Standards Board. At a meeting Tuesday, members of the PCC dealt with the subject of accounting for identifiable intangible assets in a business combination.
They voted to finalize an alternative that would exempt private companies from the requirement of separately recognizing and measuring non-competition agreements and customer-related intangible assets that cannot be sold or licensed independently in a business combination, such as a merger or acquisition.
The PCC is not able to set standards on its own, but it voted to send the alternative to FASB for endorsement. FASB will then discuss the alternative in the coming weeks in a separate meeting. Many of the exceptions to accounting standards that the PCC recommends are ultimately approved by FASB and some are even applied more widely to publicly traded companies as part of an effort to simplify accounting standards.
Also on the agenda at the PCC meeting was the subject of stock-based compensation. The PCC discussed potential ways to improve the accounting for stock-based compensation for private companies. FASB will consider adding a project to its agenda to address the accounting of stock-based compensation for public and private companies. If the project is added to FASB’s agenda, the PCC plans to continue to advise FASB on private company issues relating to the topic.
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