Life can become a blur when you are devoting so much time to a start-up business or to a new product release. As accountants, our job is to keep recordkeeping as up to date as possible while engineering and marketing move quickly to make sure the product hits the sales window at just the right time. Recordkeeping is especially critical at yearend. Now is a good time to take a minute to make sure all your company’s compliance requirements are being handled. To assist you in this assessment, here is a list of items that should be addressed in the next couple of months to make sure your company’s recordkeeping is maintained at the level expected by investors or other third parties. (more…)
CPAs Talk Tech Biz
A blog for the owners, founders, and executives of privately held technology companies.
NextRevenue Recognition Update - Step 2: Identify Performance Obligations
To continue the discussion of the ASC 606, Step 2 of the revenue recognition process requires examining what the seller has promised to do for the customer, and if there are multiple promises, whether these promises should be accounted for separately or combined. This examination determines the performance obligations which are the basis for the revenue recognition. (more…)
Revenue Recognition Update - Step 1: Identify the Contract with the Customer)
Revenue recognition is getting a lot of attention since ASC Topic 606 “Revenue from Contracts with Customers” was first issued in 2014. Since that date, we have had several posts on our blog that focus on some of the details and changes related to the new standard. As we get closer to implementation, it is time to take a closer look. (more…)
Important Tax Considerations When You Sell Your Business: Accounting Perspective (Part III)
Selling a business may be a natural progression for your company as discussed in Parts I and II of this series by Senior Tax Manager, Naila Sharifova. As Naila explained, there are tax considerations for your company and shareholders which impact the amount of income generated by the sale. But whether you are selling a startup with intellectual property or you are selling your company as part of your retirement plans, the acquirer will want to review your company’s financial statements to determine what they are willing to pay for your company. (more…)
The New Revenue Recognition Standard – Steps for Implementation
It is time to revisit the discussion on changes to revenue recognition. Just to recap, the new standard requires that revenue is recognized when goods or services are transferred to a customer and for the amount the seller expects to be entitled, based on the five step process (not necessarily performed chronologically):
- Identify the contract with the customer
- Identify the separate performance obligations
- Determine the transaction price
- Allocate the transaction price to the individual performance obligations
- Recognize revenue as the performance obligations are satisfied
The new standard is effective for privately held companies for annual reporting periods beginning after December 15, 2018, with early adoption allowed for annual reporting periods beginning after December 15, 2016 (calendar year 2017!) (more…)
Welcome to the Website!
If you have made it this far, you noticed our refreshed website. As blog authors, we are excited to be part of this new release.
Yesterday, I was in the process of reviewing a unique equity agreement and determining the accounting treatment for the equity awards. The equity being issued was for a start-up that is “going to change the way we communicate.” From my viewpoint, it seems like all the start-ups I work with have that goal – to change the way something is done. Start-ups are determined to change everything, whether it is the way data is stored in the cloud to the way we purchase goods and services. The mindset that there is a better way to do everything is an exciting environment, and ASL is glad to be a part of the changing technology of our world, even if our part (most of the time) is just to help with compliance and reporting. (more…)
Revenue Recognition
By Carol Wagner, ASL Principal
The new accounting standard for revenue recognition is finally here! It’s officially referred to as ASU 2014-09 – Revenue from Contracts with Customers. FASB issued the final revenue recognition standard in May 2014.
Expectation Gap – Are Auditors Really Charged With Finding Fraud?
“We need audited financial statements for your company.” Entrepreneurs often hear this when they are seeking financing for their technology company. From my experience, when people hear the term “audit,” the general impression is an intense review of all transactions for the time period that is being audited. If this truly was the audit process, then audits would always uncover any fraud or irregularities, as well as any errors. However, that is not really what is involved in an audit, which leads to the “expectation gap.”
Related Party Transactions Are Not as Simple as They Seem
Related party transactions seem straightforward. For privately-held companies, related party transactions are a fact of business, and they may seem totally harmless. However, recently related party transactions have caught my attention. My fellow blogger, Deepa Bhat, identified steps to reduce risks associated with related party transactions. But what about transactions that happen that seem such a normal part of business that no one thinks of them as related party transactions? And what’s the big deal anyways?…