To address the second part first, the accounting for the acquisition is dramatically different, depending on whether assets or a “business” is acquired. The following table summarizes some key differences. (more…)
CPAs Talk Tech Biz
Clarity Added for Stock Award Modification Accounting
Accounting guidance for situations when stock awards (stock options, restricted stock units and other equity-based instruments) are modified after the original grant date has been in place for a long time – with the original literature that covers fair value calculations and determining how much and when compensation expense is recorded. What hasn’t been clear for a long time is when the rules for how to handle modifications need to be applied to changes in stock awards. (more…)
Stranded Tax Effects from New Tax Act
The Tax Cuts and Jobs Act (the Act), enacted on December 22, 2017, creates some interesting consequences when applying US GAAP principles for income tax accounting related to deferred taxes. FASB guidance requires that deferred income tax assets and liabilities be remeasured as a result of changes in tax laws or tax rates. As commonly known by now, the Act reduced the maximum tax rate for corporations to 21% from 35%. (more…)
Debt Issuance Costs – Accounting Presentation Rules Demystified
“Debt issuance costs” are costs incurred that would not have been incurred had not an entity procured a new debt instrument – in other words, incremental costs directly related to the new financing. The FASB Accounting Standards Codification (ASC), interestingly, does not define “debt issuance costs”, although the FASB issued two Accounting Standards Updates (ASUs) in 2015 related to presentation of debt issuance costs, with effective dates for nonpublic companies for financial statements covering fiscal years ended in December 2016 or later. (more…)
Using Benford’s Law to Detect Fraud
What is Benford’s Law? Given a large population of numbers, what percentage of the time would you predict each leading digit (1 through 9) would appear first in the list? After thinking through the ways this might be a trick question, most people would still guess that the probability for each would be close…about 11%. Well…apparently…