A new financial reporting standard issued by FASB on Monday will allow private companies to forgo a preferability assessment the first time they elect any of the four private company accounting alternatives.
The PCC voted in favor of the change, which was endorsed by FASB, because of concerns that some private companies would not be able to elect the alternatives by their effective dates. Stakeholders were concerned that, previously, the alternatives would have been unavailable to private companies that Experienced a change after the effective date that made the alternatives advantageous.
The new amendments make the private company alternatives effective immediately and remove their effective dates. They also include transition provisions that enable private companies to forgo a preferability assessment when they elect any of the accounting alternatives.