Private Company Financial Reporting Committee ( PCFRC ) Meeting s1

PCFRC Conference Call Highlights January 20, 2012 Private Company Financial Reporting Committee 401 Merritt 7, PO Box 5116, Norwalk, Connecticut06856-5116 203-956-5218 e-mail: [email protected] Fax: 203-849-9714 JUDITH H. O’DELL Chair

Conference Call Highlights January 20, 2012 ______All Private Company Financial Reporting Committee (“PCFRC” or “Committee”) members were in attendance except James Stevenson and Maryann Lawrence.

Financial Accounting Standards Board (“FASB”) Staff: Paul Glotzer, Elizabeth Gagnon, and Kristin Bauer American Institute of Certified Public Accountants (“AICPA”) Staff: Bob Durak and Dan Noll

The PCFRC’s conference call was focused mainly on developing comments and recommendations related to the FASB’s Proposed Accounting Standards Updates (“ASU”) on revenue recognition and consolidations (agent versus principal analysis). In addition, the Committee briefly discussed some other topics. See below for further information.

Revenue Recognition

The PCFRC reviewed its draft comment letter on the FASB’s revised Proposed ASU, Revenue from Contracts with Customers. FASB staff assigned to the revenue recognition project participated in the discussion, gaining an understanding of the PCFRC’s issues and concerns and helping Committee members better understand the Proposed ASU and the FASB’s intentions. Specific comment areas discussed were:  Accounting for wasted materials  Disaggregation of revenues  Accounting for take or pay contracts  Transition method

A revised comment letter was circulated to the PCFRC for review. The final comment letter was issued to the FASB on February 16, 2011 and can be viewed at www.pcfr.org.

Consolidation: Principal versus Agent Analysis

The PCFRC reviewed its draft comment letter on the FASB’s Proposed ASU, Consolidation: Principal versus Agent Analysis. Overall the Committee was of the opinion that the Proposed ASU will improve the consolidation literature. In addition, the Committee expressed the belief that additional revisions in guidance on variable interest entities are necessary because of the significant disparity in practice that exists among preparers and practitioners in identifying VIEs and determining whether a reporting entity is the primary beneficiary. The PCFRC’s comment letter on the Proposed ASU was issued on January 25th and can be viewed by clicking here.

1/2 PCFRC Conference Call Highlights January 20, 2012 Accounting for Obligations That Have Joint and Several Liability within the Standalone Financial Statements of a Subsidiary under Common Control

This is an issue that has not yet been added to the FASB’s Emerging Issues Task Force (“EITF”) agenda, but a working group has been formed to assist the FASB staff in determining the scope of the issue before the FASB chairman considers whether it should be added to the EITF agenda. The PCFRC briefly discussed the issue and two of its members (Steve Bodine and George Beckwith) will participate in the working group.