Way, way back in 2002, the FASB responded to the Enron debacle by issuing the infamous accounting standard referred to as FIN46. While the noble goal was to curtail the ability of companies to keep potential liabilities off their balance sheets (off-balance sheet risks), the pronouncement probably created more angst than any other standard for nonpublic companies. In addition, the requirement to consolidate commonly owned entities that met the definition of a “Variable Interest Entity” with the primary operating entity financial statements often convoluted the financial reporting for users, both internal and third-party. (more…)
CPAs Talk Tech Biz
A blog for the owners, founders, and executives of privately held technology companies.
NextTop Tech Trends in 2018
By Patrick Ngai, CPA, Audit Manager
About two years ago, I took on a bigger role within the ASL tech group. On a weekly basis, I scour the internet and look for news and articles that highlight the various subsectors of the technology world. As we are approaching the end of 2018, I would like to share with you five (plus one bonus) articles that I found the most intriguing. (more…)
Year-End Tax Planning Ideas
Now is the time to think about tax saving strategies that can be implemented before the end of the year. The Tax Cuts and Jobs Act passed by Congress in December 2017 will significantly impact year-end tax planning for 2018. Several traditional tax saving ideas are no longer effective and many new opportunities are available. Some our favorite ideas are discussed below. (more…)
Cloud Computing – Customer Accounting for Implementation Costs
“Clean up” of accounting guidance is always needed to adapt to changing times. Businesses enter into transactions, both on the initiation and the receiving end, not envisioned decades ago. Computer hosting arrangements (“cloud computing”) is one such example. This post deals with only the customer end of a cloud computing arrangement. (more…)
New Going Concern Rules – First Year Observations
About two years ago, my post, FASB Shines a Light on “Going Concern”, summarized new disclosure rules that, for the first time, placed GAAP disclosure requirements on company management when preparing financial statements, based on their required consideration of the entity’s ability to continue as a going concern. The earlier post summarizes those new requirements. Since then, existing independent auditor/accountant reporting requirements were updated to respond to the changes required of management. Without reconsidering these changes here, I wondered whether any interesting observations could be made based on management’s and auditor’s responses to these new rules, which were first effective for calendar year 2016 and fiscal year 2017 financial statements. (more…)
Corporations Are Expanding Globally, Without Leaving the US
By Sylvia Chan, CPA, Tax Manager
The Tax Cut and Jobs Act (TCJA), P.L. 115-97 enacted in December 2017 has brought about exciting changes to the tax world. I would like to draw your attention to a provision that was written specifically to encourage U.S. companies to expand their operations globally without leaving the United States. Some technology companies have moved their intangible assets offshore to low-income tax jurisdictions and shifted the related income outside the United States. While tax-avoidance may not always be the primary motive, it was an inevitable truth that the U.S. Treasury was losing a portion of its revenue due to this income shifting tactic. (more…)
Cryptocurrency GAAP – Any Clarity Yet?
So you now hold cryptocurrency in your business, perhaps because you’ve decided it is an advantageous medium of exchange, or you might hope to profit from an upswing in value. Clearly, your holdings are an asset of your business, but how should you display them on your balance sheet and at what amounts? (more…)
Data Privacy-California Adds on to GDPR
Maybe companies got off easier than might have been, as this new law was passed in late-June 2018 in lieu of a potentially more restrictive November 2018 ballot initiative, when the initiative’s backers were convinced to throw support behind the passage of this law, instead. (more…)
Have You Acquired Assets or a Business – and Why Does it Matter?
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…)