On February 19, 2014 the FASB endorsed the Private Company Council (PCC) Issue 13-02 Applying Variable Interest Entity Guidance to Common Control Leasing Arrangements. This is the third accounting alternative of the PCC endorsed by the FASB.
A qualifying private company will be able to elect to early adopt this accounting alternative for financial statements not yet made available for issuance once the FASB has issued a written accounting standards update (ASU).
Many privately held companies lease building, land or equipment from commonly controlled leasing entities and have viewed the application of accounting to these types of situations as too costly and complex to implement.
This MHM Messenger provides additional details about the implications of Issue 13-02. Mayer Hoffman McCann’s Professional Standards Group will continue to monitor progress on private company standard-setting, and we are prepared to help our private company clients with any implementation issues that may arise.