The Private Companies Council of the Financial Accounting Standards Board met on April 20 to discuss various technical issues, including its proposal to update accounting standards for equity compensation.
Also at the meeting, a Board member summarized the financial reporting issues that the Board should consider prioritizing on its technical agenda. These items, previously discussed at a closed-door CPC meeting on April 19, include debt changes, distressed debt restructurings, materiality of disclosure, liabilities and equity, variable entitlement entities and financial performance reports.
The Board deliberated on questions relating to its proposal to update accounting standards – Remuneration-Remuneration in shares (subject 718): Determination of the current price of an underlying share for the grants of options on shares classified as shares.
The Board discussed how the practical expedient should refer to the Treasury Regulations of Section 409A of the United States Internal Revenue Code – by direct reference to specific paragraphs, by a summary of those paragraphs, or by by a combination of these two approaches.
The Council unanimously decided that the practical expedient would achieve the objectives of the project. At its June meeting, the board plans to discuss a draft of the final update and consider whether to recommend that it go through board approval procedures.
Council staff discussed “Update to accounting standards n ° 2021-03, Intangible assets – Goodwill and others (subject 350): Accounting alternative for the evaluation of trigger events,Noting that this accounting alternative should reduce the complexity for private companies and nonprofits performing an assessment of triggering goodwill events.
The subject of profit interests and their interdependence with the accounting of partnerships was also discussed. Board staff summarized their contacts with tax and valuation specialists since a PCB meeting on December 3, 2020.
Board and board members also discussed financial reporting issues arising from COVID-19, including disclosures related to COVID-19 and the classification of Paycheck Protection Program loans.
Board members also shared their experience in implementing “Subject 606, Revenue from contracts with customers”, and the post-implementation review plan for private companies.
In addition, Council summarized the characteristics of vendor funding programs, provided an overview of the project, and solicited comments from Council members on the use of these programs by private companies.
Council staff also provided Council with an overview of Topic 842, regarding the discount rate for tenants that are not public business entities. This project, added to the FASB agenda in April, aims to change the choice of accounting policy for tenants who are not public commercial entities to choose to use the risk-free rate as the discount rate per class. of assets.
Finally, the FASB updated the PCC on its project to simplify the classification of debts on the balance sheet. At an FASB meeting in April, the Board removed this project from the FASB technical agenda.