The document summarizes the key findings from 52 comment letters submitted in response to 18 questions from the Private Company Council regarding accounting for goodwill at private versus other companies. The Financial Accounting Standards Board issued an update in 2014 that reinstated amortization of goodwill for private companies, creating diversity in accounting treatment. Most respondents agreed amortization would reduce costs and provide useful information. However, some disagreed with limiting the alternative treatment only to private companies. The definition of public business entity also generated debate. The FASB approved the alternative treatment by a narrow margin, indicating ongoing controversy around goodwill accounting.
The inaugural edition of our accounting and financial reporting guide, Consolidation and equity method of accounting, addresses the accounting for consolidation matters under U.S. GAAP reflecting the latest standards. The guide discusses the consolidation framework and equity method of accounting, providing specific guidance and examples related to various topics such as:
The consolidation framework
Variable interest entities (VIEs)
Voting interest entities (VOEs)
Equity method investments
Joint ventures (JVs)
Intercompany transactions
Accenture 2015 Global Structural Reform Study: Unlocking the Potential of Glo...Accenture Insurance
As they reshape the financial services industry in light of the 2007-2008 financial crisis, global regulators have introduced a series of structural reform regulations to help build resilience. Global Structural Reform (GSR) is creating a new financial services ecosystem for institutions.
Accenture’s 2015 Global Structural Reform Study finds senior management working to thrive in what amounts to an all-new financial services landscape. They are investing effort and funds in their response to GSR, but their focus is on meeting regulatory demands. While that represents a good starting point, our study finds institutions might be missing out when it comes to meeting the strategic implications of reform and using reform as an opportunity to reposition the organization for sustainable growth
For private software deals, determining working capital can be tricky. Here, we will explain (from the seller’s perspective), the basics of the working capital adjustment; discuss some pitfalls; and takeaways.
The inaugural edition of our accounting and financial reporting guide, Consolidation and equity method of accounting, addresses the accounting for consolidation matters under U.S. GAAP reflecting the latest standards. The guide discusses the consolidation framework and equity method of accounting, providing specific guidance and examples related to various topics such as:
The consolidation framework
Variable interest entities (VIEs)
Voting interest entities (VOEs)
Equity method investments
Joint ventures (JVs)
Intercompany transactions
Accenture 2015 Global Structural Reform Study: Unlocking the Potential of Glo...Accenture Insurance
As they reshape the financial services industry in light of the 2007-2008 financial crisis, global regulators have introduced a series of structural reform regulations to help build resilience. Global Structural Reform (GSR) is creating a new financial services ecosystem for institutions.
Accenture’s 2015 Global Structural Reform Study finds senior management working to thrive in what amounts to an all-new financial services landscape. They are investing effort and funds in their response to GSR, but their focus is on meeting regulatory demands. While that represents a good starting point, our study finds institutions might be missing out when it comes to meeting the strategic implications of reform and using reform as an opportunity to reposition the organization for sustainable growth
For private software deals, determining working capital can be tricky. Here, we will explain (from the seller’s perspective), the basics of the working capital adjustment; discuss some pitfalls; and takeaways.
To calculate a company's average tax rate an analyst would
The accumulated benefit obligation measures
The major difference between accounting for pensions and the accounting for other postretirement benefits is that firms
For more course tutorials visit
www.newtonhelp.com
1.Developing an understanding of the client's business and industry is essential to proficiency as discussed in the general standards of GAAS. (Points: 4)
Analyzing Financial Projections as Part of the ESOP Fiduciary Process | Appra...Mercer Capital
In recent years there has been increasing concern among ESOP sponsors and professional advisors (trustees, TPAs, business appraisers, legal counsel) regarding the scrutiny of the DOL, the Employee Benefits Security Administration (“EBSA”), and the Internal Revenue Service (“IRS”). These entities (and agencies thereof) are tasked with ensuring that ESOPs comply with the Employee Retirement Income Security Act (“ERISA”) as well as with various provisions of the federal income tax code concerning qualified retirement plans (including ESOPs). Citing concerns for poor quality and inconsistency in business appraisals, the DOL has sought in recent years to expand the meaning of “fiduciary” under ERISA to include business appraisers. In the most recent forums of exchange and deriving from various court actions, there are numerous areas of concern that DOL/EBSA appear to have regarding ESOP valuations.
This paper focuses on the use of financial projections in ESOP valuations. The use (or misuse) of financial projections is often the most direct cause of over- or under-valuation in ESOPs.
Election-year politics are dominating legislative action this year as both parties lay down
policy agendas for 2017 and beyond. President Obama and the Republican leaders of Congress are offering competing plans on how to reform the US tax system and
to promote other policies intended to increase economic growth and make American companies more competitive. At the same time, both Democratic and Republican candidates seeking their party’s presidential nomination are advancing tax reform plans.
a.Convergence Efforts Made Toward the GAAP and IFRS Standards Conver.pdfanukoolelectronics
a.Convergence Efforts Made Toward the GAAP and IFRS Standards Convergence Goal on the
Financial Performance by Business Enterprises
The FASB has taken steps to: consider promptly any significant areas of deficiency in financial
reporting that might be addressed through the standard-setting process; promote the international
convergence of accounting standards concurrent with improving the quality of financial
reporting; and improve the common understanding of the nature and purposes of information
contained in financial reports.
Addressing the objectives of financial reposting by business enterprises, the SFAS CON 1 states
that financial reporting should provide information that is useful to current and potential
investors and creditors, or any other users, in their decision-making processes regarding
investments and credit, including assessing the amounts, the timing and uncertainty of
prospective cash receipts or cash inflows from dividends or interest earned, the proceeds from a
sale, or redemption or maturity of loans or securities. Reports should include information about a
company’s economic resources, claims on those resources and the effects of those transactions,
events, and circumstances that impact the resources and any claims upon them, and should be
comprehensible to anyone who has a reasonable understanding of business and economic
activities and who needs to examine or study the information with reasonable diligence.
Research conducted by the FASB on financial performance, reported by business enterprises
and their users, found that users have a strong interest in a statement of cash flows that reports
cash flows under the direct method. Users also prefer financial statements that provide greater
disclosure of information with predictive value. The research indicates that there is no across-
the-board dissatisfaction with, or demand for, sweeping change in the way financial statements
are displayed. Users also feel that key, commonly used measures lack clarity in definition of
terms such as ‘operating free cash flow,’ ‘return on invested capital,’ and adjusted, normalized or
operating earnings. Although net income is frequently used as a starting point for analysis, it is
not in the top three most important measures identified by users. There is also low demand for
comprehensive income presentation in a single statement; however, there was no transparent
opposition to providing comprehensive income items in another form.
b. Convergence Efforts Made Toward the GAAP and IFRS Standards Convergence Goal on the
Revenue Recognition Area
Accounting standards designed for public capital markets are burdensome, not only due to their
complex nature, but also due to their adoption of the IFRS standards. This is especially apparent
when applied to small and medium-sized companies, since they follow simple accounting
principles that are not designed for the complexity of transactions that some small companies
enter into, such as derivatives.
• Determine what you believe to be the major obstacles to the conver.pdfsriammanmarketing
• Determine what you believe to be the major obstacles to the convergence process. Recommend
two (2) strategies that the IASB could use in order to improve the convergence process overall.
Justify your response.
Solution
WHY IS IT IMPORTANT TO HAVE MORE COMPARABLE GLOBAL ACCOUNTING
STANDARDS? HOW DOES THAT EFFORT FIT WITH THE FASB’S MISSION?
The first priority of the Financial Accounting Standards Board (FASB) is to improve financial
reporting for the benefit of investors and other users of financial information in U.S. capital
markets. We do that by striving to set the highest-quality standards, which collectively are
known as Generally Accepted Accounting Principles (GAAP). By highest quality, we mean
standards that provide users of financial statements with information that is clear, useful, and
relevant to their needs, while considering whether the expected benefits of that information
justify the costs of providing and using it.
The FASB believes that seeking more comparable global accounting standards—improving the
quality of accounting standards used around the world while reducing differences among those
standards—is consistent with its core mission. Investors, companies, auditors, and other
participants in the U.S. financial reporting system benefit from the increased comparability that
can result from the closer alignment of standards used internationally. More comparable
standards have the potential to reduce costs for both users and preparers of financial statements
and make worldwide capital markets more efficient. The Securities and Exchange Commission
(SEC) expects the FASB to consider, in developing standards, the extent to which international
comparability is necessary or appropriate in the public interest and for the protection of
investors.
HOW DOES THE FASB SEEK GREATER COMPARABILITY?
As we conclude the bilateral convergence program begun in 2002 by the FASB and the
International Accounting Standards Board (IASB), the FASB has implemented a three-part
strategy for seeking greater comparability in accounting standards internationally:
Developing High Quality GAAP Standards
The FASB continually strives to meet the needs of investors and other users of GAAP-based
financial reports, both within and outside the United States, by improving the quality of GAAP.
The FASB believes that the high-quality standards it develops will continue to influence the
shape and future direction of international standards, as they have for more than 40 years. By
creating high-quality standards through a best-in-class standard-setting process, the FASB serves
as a reference point and benchmark for others. In other words, we will continue to lead by setting
an example of excellence.
As it undertakes standard-setting projects, the FASB carefully evaluates whether U.S. financial
reporting would be improved by implementing approaches consistent with particular IFRS
standards. This also would enhance international comparability for the benefit of inves.
To calculate a company's average tax rate an analyst would
The accumulated benefit obligation measures
The major difference between accounting for pensions and the accounting for other postretirement benefits is that firms
For more course tutorials visit
www.newtonhelp.com
1.Developing an understanding of the client's business and industry is essential to proficiency as discussed in the general standards of GAAS. (Points: 4)
Analyzing Financial Projections as Part of the ESOP Fiduciary Process | Appra...Mercer Capital
In recent years there has been increasing concern among ESOP sponsors and professional advisors (trustees, TPAs, business appraisers, legal counsel) regarding the scrutiny of the DOL, the Employee Benefits Security Administration (“EBSA”), and the Internal Revenue Service (“IRS”). These entities (and agencies thereof) are tasked with ensuring that ESOPs comply with the Employee Retirement Income Security Act (“ERISA”) as well as with various provisions of the federal income tax code concerning qualified retirement plans (including ESOPs). Citing concerns for poor quality and inconsistency in business appraisals, the DOL has sought in recent years to expand the meaning of “fiduciary” under ERISA to include business appraisers. In the most recent forums of exchange and deriving from various court actions, there are numerous areas of concern that DOL/EBSA appear to have regarding ESOP valuations.
This paper focuses on the use of financial projections in ESOP valuations. The use (or misuse) of financial projections is often the most direct cause of over- or under-valuation in ESOPs.
Election-year politics are dominating legislative action this year as both parties lay down
policy agendas for 2017 and beyond. President Obama and the Republican leaders of Congress are offering competing plans on how to reform the US tax system and
to promote other policies intended to increase economic growth and make American companies more competitive. At the same time, both Democratic and Republican candidates seeking their party’s presidential nomination are advancing tax reform plans.
a.Convergence Efforts Made Toward the GAAP and IFRS Standards Conver.pdfanukoolelectronics
a.Convergence Efforts Made Toward the GAAP and IFRS Standards Convergence Goal on the
Financial Performance by Business Enterprises
The FASB has taken steps to: consider promptly any significant areas of deficiency in financial
reporting that might be addressed through the standard-setting process; promote the international
convergence of accounting standards concurrent with improving the quality of financial
reporting; and improve the common understanding of the nature and purposes of information
contained in financial reports.
Addressing the objectives of financial reposting by business enterprises, the SFAS CON 1 states
that financial reporting should provide information that is useful to current and potential
investors and creditors, or any other users, in their decision-making processes regarding
investments and credit, including assessing the amounts, the timing and uncertainty of
prospective cash receipts or cash inflows from dividends or interest earned, the proceeds from a
sale, or redemption or maturity of loans or securities. Reports should include information about a
company’s economic resources, claims on those resources and the effects of those transactions,
events, and circumstances that impact the resources and any claims upon them, and should be
comprehensible to anyone who has a reasonable understanding of business and economic
activities and who needs to examine or study the information with reasonable diligence.
Research conducted by the FASB on financial performance, reported by business enterprises
and their users, found that users have a strong interest in a statement of cash flows that reports
cash flows under the direct method. Users also prefer financial statements that provide greater
disclosure of information with predictive value. The research indicates that there is no across-
the-board dissatisfaction with, or demand for, sweeping change in the way financial statements
are displayed. Users also feel that key, commonly used measures lack clarity in definition of
terms such as ‘operating free cash flow,’ ‘return on invested capital,’ and adjusted, normalized or
operating earnings. Although net income is frequently used as a starting point for analysis, it is
not in the top three most important measures identified by users. There is also low demand for
comprehensive income presentation in a single statement; however, there was no transparent
opposition to providing comprehensive income items in another form.
b. Convergence Efforts Made Toward the GAAP and IFRS Standards Convergence Goal on the
Revenue Recognition Area
Accounting standards designed for public capital markets are burdensome, not only due to their
complex nature, but also due to their adoption of the IFRS standards. This is especially apparent
when applied to small and medium-sized companies, since they follow simple accounting
principles that are not designed for the complexity of transactions that some small companies
enter into, such as derivatives.
• Determine what you believe to be the major obstacles to the conver.pdfsriammanmarketing
• Determine what you believe to be the major obstacles to the convergence process. Recommend
two (2) strategies that the IASB could use in order to improve the convergence process overall.
Justify your response.
Solution
WHY IS IT IMPORTANT TO HAVE MORE COMPARABLE GLOBAL ACCOUNTING
STANDARDS? HOW DOES THAT EFFORT FIT WITH THE FASB’S MISSION?
The first priority of the Financial Accounting Standards Board (FASB) is to improve financial
reporting for the benefit of investors and other users of financial information in U.S. capital
markets. We do that by striving to set the highest-quality standards, which collectively are
known as Generally Accepted Accounting Principles (GAAP). By highest quality, we mean
standards that provide users of financial statements with information that is clear, useful, and
relevant to their needs, while considering whether the expected benefits of that information
justify the costs of providing and using it.
The FASB believes that seeking more comparable global accounting standards—improving the
quality of accounting standards used around the world while reducing differences among those
standards—is consistent with its core mission. Investors, companies, auditors, and other
participants in the U.S. financial reporting system benefit from the increased comparability that
can result from the closer alignment of standards used internationally. More comparable
standards have the potential to reduce costs for both users and preparers of financial statements
and make worldwide capital markets more efficient. The Securities and Exchange Commission
(SEC) expects the FASB to consider, in developing standards, the extent to which international
comparability is necessary or appropriate in the public interest and for the protection of
investors.
HOW DOES THE FASB SEEK GREATER COMPARABILITY?
As we conclude the bilateral convergence program begun in 2002 by the FASB and the
International Accounting Standards Board (IASB), the FASB has implemented a three-part
strategy for seeking greater comparability in accounting standards internationally:
Developing High Quality GAAP Standards
The FASB continually strives to meet the needs of investors and other users of GAAP-based
financial reports, both within and outside the United States, by improving the quality of GAAP.
The FASB believes that the high-quality standards it develops will continue to influence the
shape and future direction of international standards, as they have for more than 40 years. By
creating high-quality standards through a best-in-class standard-setting process, the FASB serves
as a reference point and benchmark for others. In other words, we will continue to lead by setting
an example of excellence.
As it undertakes standard-setting projects, the FASB carefully evaluates whether U.S. financial
reporting would be improved by implementing approaches consistent with particular IFRS
standards. This also would enhance international comparability for the benefit of inves.
briefly compare the IASB and FASB in regards to the convergence proc.pdfajayelectronisyavatm
briefly compare the IASB and FASB in regards to the convergence process. Give your opinion
on the reasons why a single set of accounting principles would be beneficial to corporations.
Explain your rationale.
Solution
WHY IS IT IMPORTANT TO HAVE MORE COMPARABLE GLOBAL ACCOUNTING
STANDARDS? HOW DOES THAT EFFORT FIT WITH THE FASB’S MISSION?
The first priority of the Financial Accounting Standards Board (FASB) is to improve financial
reporting for the benefit of investors and other users of financial information in U.S. capital
markets. We do that by striving to set the highest-quality standards, which collectively are
known as Generally Accepted Accounting Principles (GAAP). By highest quality, we mean
standards that provide users of financial statements with information that is clear, useful, and
relevant to their needs, while considering whether the expected benefits of that information
justify the costs of providing and using it.
The FASB believes that seeking more comparable global accounting standards—improving the
quality of accounting standards used around the world while reducing differences among those
standards—is consistent with its core mission. Investors, companies, auditors, and other
participants in the U.S. financial reporting system benefit from the increased comparability that
can result from the closer alignment of standards used internationally. More comparable
standards have the potential to reduce costs for both users and preparers of financial statements
and make worldwide capital markets more efficient. The Securities and Exchange Commission
(SEC) expects the FASB to consider, in developing standards, the extent to which international
comparability is necessary or appropriate in the public interest and for the protection of
investors.
HOW DOES THE FASB SEEK GREATER COMPARABILITY?
As we conclude the bilateral convergence program begun in 2002 by the FASB and the
International Accounting Standards Board (IASB), the FASB has implemented a three-part
strategy for seeking greater comparability in accounting standards internationally:
Developing High Quality GAAP Standards
The FASB continually strives to meet the needs of investors and other users of GAAP-based
financial reports, both within and outside the United States, by improving the quality of GAAP.
The FASB believes that the high-quality standards it develops will continue to influence the
shape and future direction of international standards, as they have for more than 40 years. By
creating high-quality standards through a best-in-class standard-setting process, the FASB serves
as a reference point and benchmark for others. In other words, we will continue to lead by setting
an example of excellence.
As it undertakes standard-setting projects, the FASB carefully evaluates whether U.S. financial
reporting would be improved by implementing approaches consistent with particular IFRS
standards. This also would enhance international comparability for the benefit of investor.
After reading case 1-1 Standard Setting A Political Aspect” in t.docxgalerussel59292
After reading case 1-1 Standard Setting: “A Political Aspect” in the textbook, write an essay that includes the following elements:
1 A formal introduction.
2 Answers to questions (a) through (d) of the case, focusing on the role of accounting standard setting in the private sector.
3 A conclusion.
Your submitted paper should be at least 2-3 pages long and written according to CSU-Global Guide to Writing and APA Requirements, following APA style, and properly referenced.
Note that the textbook author is citing a source in this case, which must be considered when forming your references and citations.
CASE 1-1 STANDARD SETTING: “A POLITICAL ASPECT”
This case consists of a letter from Dennis R. Beresford, chairperson of the Financial Account- ing Standards Board, to Senator Joseph I. Lieberman. The specific issue was proposed legis- lation relating to the accounting for employee stock options.
Permission to reprint the following letter was obtained from the Financial Accounting Standards Board.
August 3, 1993
Senator Joseph I. Lieberman United States Senate Hart Senate Office Building Room 316
Washington, DC 20510
Dear Senator Lieberman:
Members of the Financial Accounting Standards Board (the FASB or the Board) and its staff routinely consult with members of Congress, their staffs, and other government officials on matters involving financial accounting. For example, FASB members and staff met with Senator Levin both before and after the introduction of his proposed legis- lation, Senate Bill 259, which also addresses accounting for employee stock options.
The attachment to this letter discusses the accounting issues (we have not addressed the tax issues) raised in your proposed legislation, Senate Bill 1175, and issues raised in remarks introduced in the Congressional Record. My comments in this letter address an issue that is more important than any particular legislation or any particular accounting issue: why we have a defined process for setting financial reporting standards and why it is harmful to the public interest to distort accounting reports in an attempt to attain other worthwhile goals.
Financial Reporting
Markets are enormously efficient information processors—when they have the infor- mation and that information faithfully portrays economic events. Financial state- ments are one of the basic tools for communicating that information. The U.S. capital market system is well-developed and efficient because of users’ confidence that the fi- nancial information they receive is reliable. Common accounting standards for the preparation of financial reports contribute to their credibility. The mission of the FASB, an organization designed to be independent of all other business and professio- nal organizations, is to establish and improve financial accounting and reporting standards in the United States.
Investors, creditors, regulators, and other users of financial reports make business and economic decisions based on info.
Running head MANAGERIAL ACCOUNTING 1MANAGERIAL ACCOUNTING.docxwlynn1
Running head: MANAGERIAL ACCOUNTING
1
MANAGERIAL ACCOUNTING
2
Managerial Accounting
Accounting can be defined as the procedure of keeping monetary financial records. Accounting can be group as financial and managerial accounting. For businesses to be successful, they need to be having both managerial and financial accounting experts. Impeccable managerial and financial bookkeeping are important to the progress and constant survival of any corporate. Structurally, economically, and lawfully, bookkeeping is an essential section in any institute, and the necessity for an extremely skilled accounting squad is unconditionally crucial. Despite the similarities between financial and managerial accounting, there are also differences between them.
The managerial accounting works through measuring, analyzing and reporting monetary and non-monetary information that aids directors to make judgements to accomplish the objectives of an organization. Managerial accounting emphasizes on the internal broadcasting and is not regulated by generally accepted accounting principles (GAAP). Management accounting is known for its much efforts to focus on the future rather than paying much attention to what happened in the past (Kinicki & Fugate, 2016). This type of accounting is so influential to the performance of directors and other workers as opposed to principally reporting financial events. There are no principles which guide the operations of management accounting.
Management accounting permits executives to charge attention on owners’ principal to aid judge a division’s presentation, although this may not be allowed by generally accepted accounting principles. Managerial accounting comprises assets or liabilities which may not be recognized by generally accepted accounting principles and it makes use of asset or liability quantifying rules like present values or resale prices which is not acceptable under GAAP.
Financial accounting on the other hand emphasizes on commentary to exterior events like shareholders, government interventions, and banks. It evaluates and registers business dealings and provides fiscal reports that are grounded on generally accepted accounting principles (GAAP). Financial bookkeeping is controlled by commonly accepted accounting principles (Weygandt, Kimmel & Kieso, 2015). Financial accounting comprises of sending monetary reports like income reports or balance sheets, to outside bodies like creditors, tax specialists, shareholders, and the Interior Revenue Service.
The managerial accounting positions out profit and loss accounts, job costing accounts, and operating resources, financial accounting conveys facts only for those on the external who want to decide the company's marketplace assessment. Managerial accounting emphases on issues and answers within an institute while financial accounting is worried with productivity from without. Managerial accountants make internal working reports, while financial accountants generat.
EBITDA and Other Scary Words (Series: MBA Boot Camp 2020) Financial Poise
This webinar explores the ins and outs of financial language and how you can navigate the seeming labyrinth of a language that can sound foreign and in some ways counterintuitive. This webinar teaches the correct use of EBIT, EBITDA and EBITDAR while also dealing with concepts like Cap Rate vs. Capital Cost. This webinar also sheds light on issues with ROI and Payback among other valuation tools and explains what a Cash Conversion Cycle looks like for your business.
To listen to this webinar on demand, go to: https://www.financialpoise.com/financial-poise-webinars/ebitda-and-other-scary-words-2020/
IQ from a QOE: Key Considerations When Performing a Quality of Earnings Analy...PYA, P.C.
Given the complexity of healthcare’s reimbursement environment, determining the quality of reported earnings during a transaction’s due-diligence process can prove challenging. In his presentation, “IQ from a QoE: Key Considerations When Performing a Quality of Earnings Analysis Involving Healthcare Entities,” PYA Pricipal Michael Ramey introduced key considerations when planning and performing effective QoE engagements for various healthcare entities.
Although performance appraisal is concerned with the evaluation of workers job performance, it at the same time serves to highlight the specific objectives of an organization. As the employee is being evaluated the organization is also evaluating itself by comparing objectives and standards of performance, reviews the whole appraisal framework and design as well as organizational values and culture. Performance appraisal is a veritable tool for organizations to evaluate and increase the quality of education and training of their workforce with a view to developing lifelong learning patterns and strategies to sustain productivity throughout longer working periods. Motivation as it relates to employee productivity is often behind the drive for performance and self-actualization and provides opportunities for higher productivity. Productivity is an important measure of goal achievement because getting more done with less resources increases organizational profitability. Using the exploratory research design and 109 participants the result of the study indicates a strong positive correlation between performance appraisal and employee productivity. It suggests that the issue of performance appraisal in charitable organizations should be addressed. In view of the result of the study, the paper recommends that performance appraisal should carefully review employee’s strengths and weaknesses against requirements for possible future higher responsibilities.
The integration between innovation and business is a key factor in competitiveness between organizations. That is, innovation applied to a business makes no sense if not considered as an integral tool for the processes of the organization. Companies should therefore adopt a policy where innovation plays a strategic role in the design of business models to become lean, effective and competitive entities (Moraleda, 2004). The objective of this paper is to show the importance of innovation within companies, identifying the concept, the various models that different entities might adopt in order to develop better processes of innovation, as well as indicators that represent innovation at global and national levels in order to develop strategies that lead to an increase in competitiveness. For this work the method used was a bibliographical review of relevant articles from a range of authors was conducted.
The practitioners and academicians in the business arena are highly concern about the enhancement of employee performance in this competitive age for achievement of business goals. Considering the issue, this study aimed to measure the influence of Human Resource Management (HRM) practices on the performance of employees. The data of this study have been collected from 392 on-the-job operational level employees using survey method who are working at different garment factories in Bangladesh. The collected data are analyzed through structural equation modeling to partial least square method. The study empirically proves that employee training and development, promotion opportunity, and job security has significant influence on the employees’ performance. Theoretically, this study proves that training and development, job security and promotion opportunity together influence on the performance of employees in the developing economy. The practitioners and policy makers of the organizations are expected to make necessary adjustments in their existing HRM practices based on the findings of this study in the context of Bangladesh for enhancing the employees’ performance level so that their whole-hearted efforts can be gained for the achievement of business goals.
Child labor is one of the issues receiving much attention from researchers and scholars around the world. Child labor still occurs in most countries around the world. Viet Nam is also one of the countries with relatively high child labor and increasing trend. This article is based on critical discourse analysis and data from the General Statistics Office of Vietnam to analyze some fundamental issues of child labor in Vietnam, thereby giving policy suggestions to the Vietnam government in minimizing the current child labor situation.
The rapid trend of changes and social issues in managing the global workforce has forced organizations to look for innovative ways of enhancing the job satisfaction of employees. Among these innovative approaches is the provision of Flexible Working Arrangements (FWAs). The purpose of this exploratory research was to identify the effects of FWAs, i.e., flextime schedule, compressed workweek, and telecommuting on job satisfaction from the perspective of the Ethiopian national employees of the United Nations Economic Commission for Africa (ECA) in Addis Ababa. To achieve this objective both descriptive and inferential statistics were conducted. The total population of the study was 250; out of which, 71% of responses were collected. A primary data collection method was implemented using a structured questionnaire. The analysis showed that there is significant positive effect of flextime schedule (R = .39, R2 = .264, p = .001) and compressed workweek (R = .39, R2 = .159, p = .039). This means that increase in the use of flextime schedules and compressed workweek enhances job satisfaction for employees of the ECA in Addis Ababa. The independent variables reported R = .39 and R2 = .15 which means that 15% of corresponding variations in employee job satisfaction can be explained by flexible working arrangements. Nevertheless, this study found out that there are no significant relationship of telecommuting (R = .39, R2 = .065, p = .398) on job satisfaction. Therefore, since the provision of FWAs is at the nascent stage, further studies on the effect of telecommuting on job satisfaction from Ethiopian employees context are highly recommended.
This study evaluates the impacts of urban road investment and operation in China, especially the spillover effect attributable to the investment of urban road projects. Using the synthetic control method and difference-in-differences technique and taking the opening of Jiaozhou Bay Bridge and its Subsea Tunnel in China on 30 June 2011 as a natural experiment, this paper investigates the causal effect between urban road investment and its economic impacts. Results show that the project has a positive externality in terms of its contribution to the output and employment: taken the industrial relative output as outcome variable, no matter whether the covariates are controlled or not, the parameters of the interactive terms are positive; taken the industrial relative employment rate as outcome variable, the gap between the treated unit and its counterpart indicates a direct program effect for the treated city as well as a spillover effect across the cities within the sample province. Furthermore, the permutation test ascertains that the probability of achieving a spillover effect as large as the treated city is around 5.88 per cent. Overall, the investment and operation of urban road transportation infrastructure has a noticeable spillover effect. Our results are robust across a series of placebo tests.
Poor public management defined by corruption and lack of prudence in public life continues to hold Nigeria hostage and makes good governance difficult. Since the 1980s government has been using many methods including the processes of privatization and commercialization as means of re-engineering the public sector for total quality management, and to increase the share of the public sector’s contribution to the gross domestic product. The experiment never achieved the desired level of success partly due to lack of political will on the part of government to wedge a total war against corruption, and also partly because the public sector is a large scale administration that has many entry and revolving doors which government finds difficult to close. These limitations provide the incentives for widespread public corruption that is recognized as one of the greatest challenges of government in carrying out its mandate. 110 respondents participated in this study conducted through the exploratory research design. The participants provided useful data that were triangulated with data from secondary sources for the purpose of the study. To achieve the objective of the investigation, data were analyzed through statistical techniques and the result showed significant positive correlation between good governance and good management. It was recommended that appointments in the public sector should feature a combination of people from private and public sectors of the economy to enhance competence with the aim of reducing public sector corruption. Further study should examine the reasons behind rising budget deficits as a way of reducing cost of governance in Nigeria.
In this article, we analyze in the Malian context the link between the structure of the shareholding and the sustainability of companies based on data from the census of industrial enterprises of the Ministry of Trade and Industry, 2015. The results show that Mali’s economic opening option in the 1980s, strengthened in the 1990s following the implementation of the Structural Adjustment Programs, resulting in the state’s withdrawal from the management of enterprises, have enabled the emergence of private enterprises in almost all sectors of economic activity. However, shareholding in industrial enterprises has suffered from poor governance. It also shows that the number of women entrepreneurs is close to that of men. Between 2010 and 2014, the majority of shareholders are in the agri-food sector. The majority of the investment is in the metal and metallurgical sector.
This paper’s objective is to present the importance of the strategic planning in business management. Speaking of strategic planning is always speaking in general terms and how to fix paths of behavior will necessarily affect deeply and significantly in the future evolution of the company or organization that adopts it. Today we think of the organization as part of an environment and in terms of options or choices based on what you have, of its surroundings and the opportunities or pathways that can lead to achieving the objective, (Garrido, 2009). For this work the method used was a bibliographical review of relevant articles from a range of authors was conducted. The conclusions were that the be properly analyzed and adapted to the precise conditions and characteristics of the small business or, more generally, to any type of business for which the planning is intended. Strategic planning brings multiple benefits (which exceed its disadvantages) if applied in the right way, however, there are inherent risks, which can be overcome with proper monitoring and control.
The study examined the relationship between non-financial incentives and workers’ motivation in Akwa Ibom State Civil Service exploring five key variables of continuing professional development, performance feedback, employee employment, employee participation in decision-making and task autonomy. Survey research design was adopted involving the use of questionnaire to gather data from 392 respondents drawn from a population of 20465 civil servants in state using Taro Yamene Sample Size Determination Table. The sample was drawn across all ministries and departments through stratified and convenience sampling techniques. Data collected were analysed using descriptive and inferential statistics. Hypotheses were tested at 0.05 level of significance. The five dimensions of non-financial incentives were positively correlated with workers’ motivation from the results of the analysis. Continuing Professional Development (CPD) had the highest correlation value (r = 0.33, P<0.01). Also, the five null hypotheses were rejected implying that the variables of study influence workers’ motivation in Akwa Ibom State Civil Service, Nigeria with beta coefficients and t-values of CPD (0.29;4.313); PF (0.117; 3.500); EE (0.2.141); PDM (0.182; 2.935), and TA (0.231;2.817). It was concluded that since workers’ motivation is a vital tool to organizational effectiveness and growth, employers should explore more of non-financial incentives in formulating and implementing employee benefits related policies.
This literature review is organized in five sections. Firstly, we begin with general ideas and continue with the origin of the fraudulent. Secondly, we discuss the struggle of the phenomena, insisting on the available mechanisms. Finally, we’ll discuss the link between audit and fraud.
Accounting function aims at providing accurate and sufficient accounting information to facilitate proper financial reporting and management performance. Accounting information is usually in the form of periodic or annual financial statements which are products of costing, financial and management accounting prepared for the benefit of a number of external interest groups. Accounting has its roots in the stewardship approach and as a management performance tool to guide the agent and the principal over the exact status of the going concern. Accounting function also involves financial statement analysis, interpreting the accounts by computing and evaluating ratios which relate pairs of financial information or items with one another. This analysis of ratios can be cross-sectional comparing the results of one company with another or trend. In doing so close attention is usually paid to profitability ratio to help keep pace with effective management performance. The exploratory research design was adopted for the study and result showed positive correlation between accounting function and management performance. The study was not exhaustive, therefore, further study should examine the relationship between audit failure and business failure as a matter of finding a solution to the problem. It was recommended that management should always carefully study audit reports to enhance decision making and management performance.
This study examines the effect of the trademark on consumer behavior of consumers of air conditioners in Sudan, in order to know the dimensions of the trademark that affect consumer behavior in Sudan, and provide information to companies on the dimensions of the trademark that affect the purchasing decision of the customer and contribute to customer satisfaction. The study adopted descriptive analytical method using a sample of 230 individuals who consume air conditioners in Sudan. The results showed that there is a positive significant relationship between the trademark of air conditioning and consumer behavior as well as a positive significant relationship between the trademark name of air conditioning and consumer behavior and finally there is a positive significant relationship between the trademark logo and consumer behavior.
In recent years, retired workers eligible for social security receive their emoluments from the appropriate regulatory agency and this provides more realistic evidence on the better living standard of the aged (retirees) under the scheme. Empirically, this paper examines the impact of social security on economic growth in Ghana using time series secondary (monthly) data ranging from 2000 – 2018. The author answers in two questions: 1) how significant are pensioners benefit payments dependent on economic growth and also, 2) how business environmental policy is contributing to economic performance as far as pensioners well-being are concerned. Using STATA analytical software, the findings show a positive significant relationship between social security and economic growth. The study concludes by outlining appropriate policy measures to help strengthen the current social security scheme in Ghana.
This research begins by showing the different meanings attributed to the term cluster by different currents and authors, which suggests definitions that are found around its spatial framework. Next, the factors that intervene in the competitiveness of a region and its growth are shown, for the development of these, Porter’s model of competitiveness which was taken as reference, and the contexts: geographical and economic. Therefore, the methodology was used based on a qualitative design, with descriptive and correlational scope since it will analyze differences of each cluster, with respect to the factors of dimensions, establishments, growth, economic impact and policies. To do this, the information-gathering tool was two semi-structured interviews with cluster leaders in both countries, because the approach is based on data collection methods that are not completely standardized or predetermined. And finally, the results of the comparison of the Mexican Bajío automotive cluster with the German cluster located in Baden-Württemberg are presented.
This research aims at identifying the impact of excellence in drawing up the following four marketing mix strategies (Product, Pricing, Promotion and Distribution) of the small and medium enterprises in Jordan, in terms of their marketing performance in its dimensions (Sales Growth, Profit Growth, Customer Attraction and Customer Retention).In order to reach the results of this study, A total of (187) valid questionnaire surveys were collected from companies belong to the SME Association in Jordan. The Statistical Package for the Social Sciences (SPSS) approach was used to analyze the collected data. The empirical results indicated there is a significant relationship between the building of marketing strategies of the marketing mix elements in the Jordanian SME and their marketing performance, by (sales growth, profit growth, customer attraction, and customer retention) dimensions. Consequently, decision makers in small and medium organizations need to choose strategies based on their target market to the positive impact on the mind of the consumer, which in turn could improve modern scientific methods in SME to divide their markets into sub-market sectors.
The study investigates the impact of team building on organisational productivity. The objective of this study is to evaluate the impact of team building among the members of the selected case study and to assess the effect of training and retraining of team members on organisational productivity. The study also x-rayed the absence of team building in a workplace which led to low levels of turnover and productivity. the total population of the study was 750 while researcher employed Yaro Yamane sampling technique to select sample size of 261 because of the large population and hypothesis were tested using Pearson correlation. The finding revealed that if members of the team can work in synergy without considering the differences in the likes of level of educational background and others, the expected productivity will be very high. It was also observed that capabilities of team leader in carrying out the assigned task determined its output especially if the team leader understands the technical knowhow of job and he is friendly with co-team members with a lot of motivation, that this would definitely enhance employees’ efficiencies and productivities. The study recommends that team members should trust, support and respect one another individual differences in order to accomplish group common goals and tasks.
Compared with general commercial reverse logistics operators, the recovery and treatment of expired drugs and medical waste is a complex and highly technically difficult project. The qualifications required by the relevant service providers are also more stringent. For medical institutions, the selection of reverse logistics operators is always a critical issue. On the perspective of sustainability, this paper aims to investigate and explore the critical factors of selecting a medical reverse logistics service provider. Through the process of the Delphi method, the experts’ assessments were collected, and 24 factors affecting the selection of medical reverse logistics service provider were screened and summarized. Then, Decision-Making Trial and Evaluation Laboratory (DEMATEL) was employed to calculate the total influence values and net influence values between factors that could be used to draw the visual causal map. Referring the causal map, “Green process operation level” and “Recycling process greening degree” are significantly higher than other factors in terms of total influence value and net influence value. Therefore, they can be regarded as crucial factors. This finding implies that medical reverse logistics providers must have the ability to improve the greening of facilities, as well as equipment, integrating existing processes to make it greener and environmentally friendly.
The major objective of any firm is to maximize the shareholders wealth. This is evidence through dividend yield and payout ratio and this encapsulate into the dividend policy of a company. The research purpose aimed at examining the influence that dividend policy has on the volatility of share prices among the listed insurance corporations in Kenya. Research design, approach and method: Data was collected from listed insurance corporations over a 10-year period with a total of 49 data points. The Pearson correlation and ordinary regression analysis were employed. The results reveal the existence of a positive link among the study variables. The correlations were found to be substantial at ninety-five percent confidence level. It is worth noting that the model summary shows forty-three-point one percent of changes in the volatility of stock price are explicated by dividend yield and payout ratio. ANOVA statistics which examines whether the analytical model as set out in the study explains variations in the dependent variable concluded that the model is analytically substantial. The outcome revealed a statistically significant positive link between stock price variations and the ratio of dividend payout. Research also established a statistically substantial negative interrelation between volatility of stock prices and dividend return. Results therefore recommend that companies should have dividend policies which are mapped to shareholders wealth maximization objective. The study suggests further studies be undertaken to determine whether there exists an analytically substantial difference between the dividend policies of various sectors in the economy.
This study is about the impact of selected macroeconomic variables on economic growth of Bangladesh. Economic growth of Bangladesh is measured in terms of annual nominal GDP growth rate. Least squared regression model has been employed considering exchange rate, export, import and inflation rate as independent variables and gross domestic product as the dependent variable in this study. The results reveal that export and import have significant positive impact on GDP growth rate. The other variables (exchange rate and inflation) are not significant, indicating that there exists no significant relationship among the variables. The findings will help the policy makers to make policies concerning the country’s economic growth to remain robust in the near future.
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Accounting for Goodwill at Private versus Other Companies: Amortize, Impair, or Write Off
1. Business, Management and Economics
Research
ISSN: 2412-1770
Vol. 1, No. 4, pp: 44-49, 2015
URL: http://arpgweb.com/?ic=journal&journal=8&info=aims
*Corresponding Author
44
Academic Research Publishing Group
Accounting for Goodwill at Private versus Other Companies:
Amortize, Impair, or Write Off
Dahli Gray* Graduate School Professor Keiser University 1900 W. Commercial Blvd. Fort Lauderdale, FL 33309, USA
Monica Jorge Staff Auditor with Cherry Bekaert LLP, Miami, FL 33183,USA
1. Introduction
For decades there has been movement toward harmonizing United States (US) Generally Accepted Accounting
Principles (GAAP) with global and/or international accounting standards relative to achieving a public interest goal
of increasing the decision usefulness of financial statements especially those prepared by multinational
organizations. In the year 2001 the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) 142 that replaced amortization with impairment as the method of measuring and
reporting goodwill. In the year 2008, the International Accounting Standards Board (IASB) issued International
Financial Accounting Standard (IFRS) number 3 that also eliminated amortization of goodwill and instituted the
measurement and reporting practice referred to as impairment of goodwill. Harmonization appeared to be achieved.
In December 2014, the FASB issued FASB ASU 2014-18 that reinstated amortization of goodwill by private
companies. This is not an article about US versus non-US financial standards or standard setting. It is about US
accounting standard setting relative to the public interest where some discussion of harmonizing accounting
standards helps clarify the public interest focus of the article. The idea of converging accounting standards was
added to the idea of harmonizing accounting standards as more organizations engaged in international transactions
and events that could or should be reflected in the organization’s financial statements. Harmonization and/or
convergence has been hoped to increase comparability of financial statements. Part of the harmonization and/or
convergence discussion has centered on public interest policies relative to principles-based versus rules-based
accounting standards. The International Financial Reporting Standards (IFRS) have been characterized as being
principles based. The US GAAP has been characterized as being rules based. The diversity in rules increases
complexity, which is counter to the public interest goal of the information being useful. Increasing complexity
decreases the ease of understanding and comparing financial information. This article documents movement away
from the public interest goal of decreased complexity and increased decision usefulness as US GAAP is being
promulgated that increases diversity based on whether a company is private or not-private.
Abstract: This article documents increased diversity in financial accounting practice. The Financial
Accounting Standards Board (FASB) standard-setting process for the Accounting Standards Update (ASU)
2014-18 is used as documentation. The FASB ASU 2014-18 was approved by a slim margin of four to three of
the FASB members. This indicates continuing controversy around accounting for goodwill that relates to the
public interest goal of similar accounting for similar transactions and events. This article analyzes the content
within the 52 Comment Letters submitted in response to 18 questions asked by the Private Company Council
(PCC) that lead to the promulgation of the FASB ASU 2014-18. Private companies are to include non-
marketable intangibles in the account goodwill that non-private companies are to continue measure and report
separate from goodwill. Plus private companies are allowed to either amortize or test for impairment in
measuring and reporting goodwill. Non-private companies are to test for impairment. Non-private companies do
not have the option of using amortization as part of the measurement and reporting process regarding goodwill.
This diversity in measuring and reporting goodwill decreases progress toward the public interest goal of
comparability of financial reports. Comparability is a significant quality thought to improve decision usefulness
of information.
Keywords: Accounting standard-setting process; Accounting for goodwill; Private companies; Non-private companies.
2. Business, Management and Economics Research, 2015, 1(4): 44-49
45
This article addresses accounting for goodwill, which includes amortization, testing for impairment, or
immediate write offs by analyzing the FASB Accounting Standards Update (ASU) 2014-18 and the content within
the 52 related Comment Letters submitted in response to 18 questions asked by the Private Company Council (PCC).
The FASB ASU 2014-18 was approved in December 2014 by a slim margin of 4 to 3, indicating a continuing
controversy around accounting for goodwill and that there will be future changes. The 3 dissenting FASB members
opposed FASB ASU 2018-18 “because they do not believe that it is appropriate to finalize an accounting recognition
and measurement alternative for private entities while at the same time exploring the same accounting issues for
public entities.”
2. Methodology
The source of the data for this article was the FASB website that contained the 52 Comment Letters submitted to
the PCC (Financial Accounting Standards Board (FASB), 2014) in response to the PCC’s call for comments. The
PCC asked 18 questions in the call for comments. The respondents’ answers to the 18 questions were tabulated. The
tabulated results were analytically discussed and compared to the FASB’s decisions as published in the FASB ASU
2014-18. The 18 questions were as follows in a partially summarized format:
1. Are you primarily a preparer, user, public accountant or, if other, please specify?
2. Should any types of entities, transactions or accounts in the proposed scope be excluded?
3. Should the FASB consider expanding the scope of the accounting alternative to other entities, such as publicly
traded companies or not-for-profit entities?
4. Would the proposed amendments reduce overall costs and complexity compared with existing guidance?
5. Do you agree that the accounting alternative for goodwill would provide relevant and decision-useful
information to users of private company financial statements?
6. Do you agree with the PCC’s decision to amortize goodwill on a straight-line basis over the life of the primary
asset acquired in a business combination, not to exceed 10 years?
7. Do you agree that goodwill accounting for under this alternative should be tested for impairment at the entity-
wise level?
8. Do you agree that goodwill accounted for under this alternative should be tested for impairment only upon the
occurrence of a triggering event that would indicate that the fair value of the entity may be below its carrying
amount?
9. Should the assessment of triggering events be performed consistently with how entities currently assess for
goodwill impairment between annual tests?
10. Do you agree with the alternative one-step method of calculating goodwill impairment loss as the excess of the
carrying amount of the entity over its fair value?
11. Do you agree with the disclosure requirements of the proposed Update, which largely are consistent with the
current disclosure requirements in FASB Accounting Standards Codification (ASC) Topic 350?
12. How much effort would be needed to implement and audit the proposed amendments?
13. Do you agree that goodwill existing as of the effective date should be amortized on a straight-line basis
prospectively over its remaining useful life not to exceed 10 years?
14. When should the alternative accounting method be effective? Should early application be permitted?
15. How much effort would be needed to implement and audit the proposed amendments?
16. Would the proposed amendments result in less relevant information?
17. If an entity elects the accounting alternative, should the entity also be required to apply ASC Topic 850?
18. Do you agree with the FASB’s tentative definition of a public business entity?
3. Results and Discussion
3.1. Respondents
The first question in the call for Comment Letters from potential respondents asked whether the respondent was
primarily a preparer, user, or public accountant. Table 1 summarizes the Respondents’ profiles, and shows that
public accountants submitted 48 percent of the Comment Letters, and non-public accountants submitted 52 percent,
though they did not explicitly declare their status as either preparers or users. While the respondents prepare and use
financial information and reports, public accountants are the major separately identifiable group. While comparing
the accountants’ and non-accountants’ responses is out of scope for this study, opinions did not appear to vary
between these groups.
Table-1. Respondents Profiles
Respondent Type Percent Number
Non-Public Accountants 52% 27
Public Accountants 48% 25
Total 100% 52
3. Business, Management and Economics Research, 2015, 1(4): 44-49
46
3.2. Scope and Definitions
The major controversy with FASB ASU 2014-18 is not the “accounting alternative” available to private
companies electing to implement a modification of ASC Topic 805 to account for identifiable intangible assets in a
business combination. The major controversy is that different measurement and reporting methods for similar
transactions and events are promulgated by the FASB based on whether the organization is private or not private.
Size of the organization is not the defining variable for different measurement and reporting. Whether an
organization is domestic or multinational is the defining variable. It is just whether the organization is private or not
private. According to the accounting alternative, intangible assets that are not “capable of being sold or licensed
independently” should be included in goodwill even if these assets can be identified and measured. Non-private and
private companies electing not to implement the amendment must measure and report these non-marketable
intangible assets (e.g., customer-related intangible assets, noncompetition agreements) using the GAAP standard
prior to FASB ASU 2014-18, wherein these assets are reported separately from goodwill. Only 15 percent of the
respondents opposed the alternative method (see Table 2), based on the fact that the accounting alternative was only
available to private companies when these respondents felt that this should be available to all types of companies.
Since FASB 2014-18 concluded that the accounting alternative “reduces the cost and complexity associated with the
measurement of certain identifiable intangible assets without significantly diminishing decision-useful information,”
the debate continues as to why the alternative is not available to non-private companies. The net result will be fewer
intangible asset accounts when the non-marketable intangible assets accounts are no longer reported separately, and
included in goodwill.
Table-2. Accounting Alternative to Include Non-marketable Intangible Assets in Goodwill
Comment Letter Question Agree Disagree Neither agree or
disagree
FASB 2014-18
Guidance
2. Private companies and/or proposed transactions
and/or events excluded 15% 31% 54% No
3. Not-for-profit and public companies included
44% 23% 33% No
Comment Letter Question 2 asked respondents whether any of the specified transactions and accounts for
private companies should be excluded. The FASB decision was consistent with 85 percent of the respondents who
did not think that any of the specified transactions or accounts for private companies should be excluded.
Comment Letter Question 3 was whether “non-private” (e.g., non-profits, publicly traded) companies should
have the same treatment as private companies (see Table 2): 23 percent responded that non-private companies should
be excluded, and 44 percent responded that non-private companies should be offered the alternative method (i.e.,
amortization). Many of the 33 percent of respondents who neither agreed nor disagreed suggested that not-for-profits
should be included with private companies. The PCC could have broken this question into two questions asking
specifically about non-profits, and whether to include public companies. Several comments recommended including
credit unions with private companies. The FASB decided exclude non-private companies from the scope.
The FASB ASC Glossary definition of private companies specifically excludes non-profit and public business
companies, though the FASB definition of public business companies continues to be under revision. Comment
Letter Question 18 asked respondents whether they agreed with the FASB’s tentative decision regarding the
definition of a public business entity. Essential to the application of FASB ASU 2014-18 is the definition of a
private company. The FASB ASC Glossary defines a private company as “an entity other than a public business
entity, a not-for-profit entity, or an employee benefit plan.” The tentative definition of a pubic business entity is:
A public business entity would be defined as a business entity meeting any one of the following
criteria: a. It is required to file or furnish financial statements with the Securities and Exchange
Commission. b. It is required to file or furnish financial statements with a regulatory agency in
preparation for the sale of securities or for purposes of issuing securities. c. It has issued (or is a
conduit bond obligor) for unrestricted securities that can be traded on an exchange or an over-the-
counter market. d. Its securities are restricted, and it is required to provide U.S. GAAP financial
statements to be made publicly available on a periodic basis pursuant to a legal or regulatory
requirement.
Table 3 reports the responses, showing that only 19 percent agreed, eight percent disagreed, and the remaining
73 percent did not agree or disagree as they were waiting on a finalized decision from the FASB. Though only eight
percent agreed with the FASB’s tentative definition, the FASB included it in FASB ASU 2014-18.
FASB ASU 2014-18 stipulates that private companies electing to implement the accounting alternative must
also implement FASB ASU 2014-02, which allows them to amortize goodwill, while all others must use a process to
test for impairment of goodwill. The call for Comment Letters after publication of FASB ASU 2014-02 in January
2014 included questions related to the accounting amendments therein. The main controversy surrounds the
definition of private versus public companies.
4. Business, Management and Economics Research, 2015, 1(4): 44-49
47
Table-3. Public Business Company Defined
Comment Letter Question Agree Disagree Neither agree or
disagree
FASB 2014-18
Guidance
18. Tentative decision regarding definition of a
public business company 19% 8% 73% Included
3.3. Accounting Treatment for Goodwill
Amortization of goodwill is an option to adjusting goodwill based on estimated impairment or the direct write
off of goodwill. Amortization is available only to private companies per the amendment to FASB ASC Topic 350
from FASB ASU 2014-02. Not-for-profit and public companies must measure goodwill using the impairment
method or direct write off.
3.3.1. Amortization
Table 4 reports the results from Comment Letter questions 4 and 15, which concern costs or complexity
associated with amortization. Question 4 asked about the costs and complexity of using amortization versus
impairment testing. Sixty three percent of the respondents felt that the costs and complexity would decrease. The
FASB agreed. Question 15 asked about the effort to implement or audit amortization. Fifty percent of the
respondents felt that the process would not be more difficult.
Table-4. Availability of Accounting Alternative for Goodwill including Non-marketable Intangible Assets
Comment Letter Question Agree Disagree Neither agree or
disagree
FASB 2014-
18 Guidance
4. Amortization reduces costs and complexity
63% 10% 27% No
15. Only a little effort needed to implement and
audit amortization 50% 8% 42%
Not
specifically
mentioned
Table 5 reports the results from questions 5 and 16, which asked whether amortization provides relevant and
decision-useful information. Over 50 percent of the respondents agreed that it does. Only 15 percent agreed that the
proposed amendments would not result in less relevant information, and 77 percent did not include opinions about
this. The FASB approved a method consistent with the opinion that amortization provides relevant and decision-
useful information.
Table-5. Amortization Relevance and Decision-Usefulness
Comment Letter Question Agree Disagree Neither agree or
disagree
FASB 2014-18
Guidance
5. Amortization provides relevant decision-
useful information 52% 8% 40% Yes
16. Amortization will result in less relevant
information for users 15% 8% 77%
No
Table 6 reports the results for questions 6 and 13, which asked whether straight-line amortization should apply
for ten or fewer years. In the tabulation process, these two questions were divided. Suggestions included that the
time line should be 15 years, as is for the Internal Revenue Service (IRS). With the differences in financial
accounting, using a maximum of ten years, and the IRS, using a maximum of 15 years, deferred taxation could
potentially result in additional complexity. Twenty five percent of the respondents agreed with a time line of 10 or
fewer years; about 25 percent suggested that 15 or fewer years would reduce complexity. Companies using 15 years
for tax reporting and ten years for financial reporting will have to manage the complexity of measuring and reporting
the difference in deferred taxes in the financial statements.
Table-6. Amortize Goodwill using Straight line over 10 versus 15 or Fewer Years
Comment Letter Question Agree Disagree Neither agree or
disagree
FASB 2014-18
Guidance
6. Amortize using straight line not to exceed 10 years 25% 25% 50% Yes
6b. Amortize using straight line not to exceed 15 years. 23% 2% 75% No
13. Amortize over remaining useful life not to exceed
10 years
25% 27% 48% Yes
13b. Amortize over remaining useful life not to exceed
15 years
19% 4% 77% No
5. Business, Management and Economics Research, 2015, 1(4): 44-49
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3.3.2. Impairment Testing
Table 7 summarizes the responses from questions 7 – 10, which ask about impairment testing, that is, whether a
one-step test of impairment should be used if there is a triggering event. Fifty percent or more of the respondents
said yes, and the FASB agreed.
Table-7. Testing for Impairment of Goodwill
Comment Letter Question Agree Disagree Neither agree or
disagree
FASB 2014-18
Guidance
7. Test for impairment at entity-wide level 50% 12% 38% Yes
8. Test for impairment if there is a triggering event 52% 4% 44% Yes
9. Triggering events noted in the proposal are
appropriate
50% 2% 40% Yes
10. Agrees with one step method of calculating
impairment
58% 2% 40% Yes
The dissenting FASB members stated, “under today’s impairment accounting, the decline in value of externally
acquired goodwill often is not recognized because the current impairment model writes down goodwill to a lower
impaired amount that considers not only existing externally acquired goodwill but also includes both internally
generated goodwill existing at the date of the acquisition and goodwill created or regenerated by investments
subsequent to the acquisition. The dissenting Board members see no basis for a view that goodwill should be treated
as an indefinite-lived asset.”
3.3.3. Write Offs
Historically, guidance for accounting for goodwill discussed impairment testing and direct write offs upon
acquisition, preferring the former and discouraging the latter. The FASB ASU 2014-18 amendment revisits the issue,
again discouraging direct write offs. Discouraging is not the same as not allowing.
3.4. Remaining Questions
The remaining questions deal with disclosure, prospective implementation, early application, the
implementation of topics 805 and 350, and write offs for goodwill. Question 11 asked about disclosure requirements,
and only 8 percent of respondents disagreed with the recommendations. FASB adopted the proposed disclosure
requirements, though the dissenting members felt that “disclosure is never an acceptable substitute for recognition.”
Question 12 asked whether implementation should be prospective. As 56 percent of the respondents agreed, the
FASB adopted prospective implementation. Question 14 asked if early application should be allowed. Since 58
percent of respondents agreed, this was included as an option. Comment letter question 17 asked whether Topic 805
and the proposed changes in FASB 2014-18 (Topic 350) should be implemented simultaneously. While the FASB
indicated that these should be implemented at the same time 37 percent of respondents agreed, 19 percent disagreed
with the remainder not taking a stand.
4. Conclusion
The FASB ASU 2014-18 amended the FASB ASC Topic 805 by increasing diversity relative to accounting for
goodwill. The third method of amortization was added to the preferred method of impairment and the discouraged
(but allowed) direct write-off method. Increasing diversity in the measuring and reporting of goodwill is a step away
from the public interest goal of decision-useful information founded in the quality of being able to compare financial
reports developed using similar methods to measure and report similar transactions and events. The FASB ASU
2014-18 also allows an accounting alternative allowing the inclusion of non-marketable assets in the goodwill
account for private companies that is not allowed for non-private companies. The dissenting FASB members stated
“that this issue should not be resolved on a piecemeal basis for private entities only [as] … the issue [should be
addressed] at the same time for all entities (private, public business, and not-for-profit entities) to avoid the risk of
having an accounting alternative in place for private entities that ultimately may be inconsistent with and overturned
by future Board decisions.” FASB ASU 2014-18 also validates FASB ASU 2014-02, which granted private
companies the option of amortizing goodwill instead of testing for impairment, which non-private companies use per
FASB ASC Topic 350. The review reported in this article of the tabulated 52 Comment Letters submitted to the PCC
prior to the final publication of FASB ASC 2014-18 sheds light on the controversy surrounding the measurement
and reporting for goodwill. Illuzzi (2015) commented on what she refers to the FASB “preferability” rules as related
to the goodwill alternative. She concluded the “new private company financial reporting alternatives have given
financial statement preparers many issues to consider” (Illuzzi, 2015). While the FASB uses due process in the
establishment of accounting standards, FASB ASC 2014-18 only partially reflects the preferences of the people who
and organizations that formally submitted comments on the proposed content. Without an adopted definition of what
constitutes a public business entity, there appears to be on-going diversity and potential future changes in financial
accounting for goodwill.
6. Business, Management and Economics Research, 2015, 1(4): 44-49
49
References
Financial Accounting Standards Board (FASB) (2014). Comment letters regarding public company council (PCC)
project: PCC-13-01B Intangibles—Goodwill and other (Topic 350): Accounting for goodwill.
http://www.fasb.org/jsp/FASB/CommentLetter_C/CommentLetterPage&cid=1218220137090&project_id=
PCC-13-01B
Illuzzi, K. (2015). Preferability and the private company alternatives: How a FASB principle for accounting policy
decisions affects election of options developed by the PCC. Journal of Accountancy: 47-48.
http://www.fasb.org/jsp/FASB/CommentLetter_C/CommentLetterPage&cid=1218220137090&project_id=
PCC-13-01B
Bibliography
FASB (2014). Financial accounting series FASB accounting standards update No. 2014-18 business combinations
(Topic 805) Accounting for identifiable intangible assets in a business combination a consensus of the
private company council. http://www.fasb.org/resources/ccurl/218/786/ASU%202014-18.pdf