Over the past several years, it has become common for companies to control businesses without a majority voting interest while avoiding consolidations, and I have several clients involved with related entities requiring the regular assessment of Variable Interest Entities (VIEs) and its varied implications. This year I had the pleasure of working with San Jose State University students on a project to analyze the provisions of U.S. GAAP as it relates to determination VIEs and primary beneficiaries and the consolidation considerations for such entities. It is certainly not a straightforward topic, and their step-by-step explanation, with the aid of a flowchart, broke down the requirements into layman’s terms that quite succinctly highlighted the salient characteristics of a VIE and when to consolidate. You may find our analysis from the project helpful as…
GAAP Gets Easier, now that’s a First! (ASU 2009-13 and ASU 2009-14)
When you go to buy a car, yeah, you’re buying a massive computer system these days, but when it all boils down, you went to purchase a car, that’s why you went to the car lot not to Fry’s. The accounting rules for revenue recognition for sales involving multiple element arrangements, like buying a car with a computer, have recently become a whole lot easier. Many public companies like Apple early adopted these new accounting rules because they allow the company to accelerate the period of recognizing revenues. In Apple’s case…
Lessons from Groupon: Does Gross vs. Net Really Matter?
In the midst of the buzz around the Groupon IPO in the last half of 2011, Groupon was forced to restate its pre-IPO revenues to nearly half of what was previously reported at the request of the SEC. Why? The SEC required Groupon to report its revenues at net proceeds (the amount a merchant actually pays Groupon to run an ad) instead of gross proceeds (the total out of pocket amount a customer actually pays to Groupon for an online coupon, which includes the merchant’s share). As we reflect on the lessons learned from this, it begs the question: What should you think about when reporting your revenues at gross vs. net?…
3 Intangible Assets You Might Overlook During a Merger or Acquisition
I recently received a phone call from a CFO asking for a crash course in accounting for business combinations. Merger and acquisition activity is increasing as corporations look to grow, so the need for info on business combinations is great. In fact, a couple of my more successful clients underwent acquisitions in 2011 to larger corporations. In addition, clients are also interested in acquiring companies that will strategically benefit their growth. As I was putting materials together for this CFO, a couple things jumped out at me regarding intangible assets that I feel are not often thought about during the merger and acquisition process…