PCC approves private company GAAP exception for certain acquired intangible assets
 

PCC approves private company GAAP exception for certain acquired intangible assets

The Private Company Council (PCC) voted Tuesday to approve a GAAP alternative that will allow private companies to elect not to separately recognize and measure certain intangible assets acquired in a business combination.

Private companies that elect the alternative would not recognize:

  • Noncompetition agreements.
  • Customer-related intangible assets that are not capable of being sold or licensed independently from the other assets of a business.


It is anticipated that customer-related intangible assets often would not meet one of the criteria for recognition. Customer-related assets that may meet one of the criteria for recognition would include mortgage servicing rights, commodity supply contracts, and core deposits.

If FASB endorses the alternative, it can be written into GAAP. FASB’s endorsement is required for all PCC-originated GAAP alternatives. FASB will discuss the topic in the coming weeks. Read more on the Journal of Accountancy.