Presentation from Ohio Accounting Firm - Rea Associates - discussing how companies should manage the classification of capital assets. Topics covered include asset policies and thresholds, tracking construction in progress additions, estimate useful lives and recongizing capital asset impairment opportunities.
Asset Revaluation or Impairment - Understanding the Accounting for Fixed Asse...eprentise
Changes in financial reporting requirements have transformed the fixed asset accounting framework. International Financial Reporting Standards (IFRS) require fixed assets to be recorded at cost, but there are two accounting models – the cost model and the revaluation model. So what’s the difference, and when should you use each? This session featuring Brian Lewis, Corporate Controller at eprentise, will address fixed asset accounting and reporting under both models and how each is accounted for in Release 12.
The document provides an overview of basic financial accounting concepts. It explains that accounting is based on the accounting equation of assets equaling liabilities plus owners' equity. Assets are valuable resources owned, while liabilities are obligations, and owners' equity is the residual interest in assets. Revenues increase owners' equity by providing goods/services, while expenses decrease it by consuming resources to generate revenue. Financial statements like the balance sheet present a company's assets, liabilities, and owners' equity at a point in time.
Financial accounting mgt101 power point slides lecture 21Abdul Wadood Ansary
This document discusses distinguishing between capital and revenue expenditures and receipts in financial accounting. It defines capital expenditures as those that benefit future periods, such as acquiring or improving fixed assets. Revenue expenditures benefit the current period, like day-to-day business expenses. While capital items affect the balance sheet, revenue items are included in the profit and loss account. The document provides examples and exceptions to help classify different types of expenditures and receipts as capital or revenue.
Fixed Assets Accounting is very essential for matching costs with revenues. A fixed asset is an asset held with the intention of being used for producing goods. Check the above presentation for in-depth details.
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An overview of the tax treatment of expenditures related to tangible property in accordance with the new regulations, including capitalization of expenditures, unit of property, the deminimis rule and dispositions.
Plant & equipment depreciation and intangible assetsRamila Anwar
This document discusses depreciation and plant and equipment assets over multiple pages. It defines depreciation as allocating the cost of tangible assets over their period of use. It also discusses the matching principle of offsetting revenue with the costs of services provided. The document covers categories of plant and equipment assets, determining their costs, capital vs operating expenditures, disposal of assets, and gains/losses. It also defines intangible assets such as goodwill and patents.
This document discusses the revaluation of fixed assets. It provides reasons for revaluation including providing more useful information to financial statement users and enabling better performance ratio calculations. The process of revaluation involves crediting a revaluation reserve account and debiting the asset account to reflect the updated market value. When the revalued asset is later disposed of, the revaluation reserve is debited and a revenue reserve is credited for the total revaluation amount related to that asset. Things to note include transferring depreciation on revalued assets to the revaluation reserve and using the latest revalued amount, not original cost, for assets sold after being revalued.
Asset Revaluation or Impairment - Understanding the Accounting for Fixed Asse...eprentise
Changes in financial reporting requirements have transformed the fixed asset accounting framework. International Financial Reporting Standards (IFRS) require fixed assets to be recorded at cost, but there are two accounting models – the cost model and the revaluation model. So what’s the difference, and when should you use each? This session featuring Brian Lewis, Corporate Controller at eprentise, will address fixed asset accounting and reporting under both models and how each is accounted for in Release 12.
The document provides an overview of basic financial accounting concepts. It explains that accounting is based on the accounting equation of assets equaling liabilities plus owners' equity. Assets are valuable resources owned, while liabilities are obligations, and owners' equity is the residual interest in assets. Revenues increase owners' equity by providing goods/services, while expenses decrease it by consuming resources to generate revenue. Financial statements like the balance sheet present a company's assets, liabilities, and owners' equity at a point in time.
Financial accounting mgt101 power point slides lecture 21Abdul Wadood Ansary
This document discusses distinguishing between capital and revenue expenditures and receipts in financial accounting. It defines capital expenditures as those that benefit future periods, such as acquiring or improving fixed assets. Revenue expenditures benefit the current period, like day-to-day business expenses. While capital items affect the balance sheet, revenue items are included in the profit and loss account. The document provides examples and exceptions to help classify different types of expenditures and receipts as capital or revenue.
Fixed Assets Accounting is very essential for matching costs with revenues. A fixed asset is an asset held with the intention of being used for producing goods. Check the above presentation for in-depth details.
For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/SlideshareFaccounting
Join us on Facebook: http://www.facebook.com/welearnindia
Follow us on Twitter: https://twitter.com/WeLearnIndia
Read our latest blog at: http://welearnindia.wordpress.com
Subscribe to our Slideshare Channel: http://www.slideshare.net/welingkarDLP
An overview of the tax treatment of expenditures related to tangible property in accordance with the new regulations, including capitalization of expenditures, unit of property, the deminimis rule and dispositions.
Plant & equipment depreciation and intangible assetsRamila Anwar
This document discusses depreciation and plant and equipment assets over multiple pages. It defines depreciation as allocating the cost of tangible assets over their period of use. It also discusses the matching principle of offsetting revenue with the costs of services provided. The document covers categories of plant and equipment assets, determining their costs, capital vs operating expenditures, disposal of assets, and gains/losses. It also defines intangible assets such as goodwill and patents.
This document discusses the revaluation of fixed assets. It provides reasons for revaluation including providing more useful information to financial statement users and enabling better performance ratio calculations. The process of revaluation involves crediting a revaluation reserve account and debiting the asset account to reflect the updated market value. When the revalued asset is later disposed of, the revaluation reserve is debited and a revenue reserve is credited for the total revaluation amount related to that asset. Things to note include transferring depreciation on revalued assets to the revaluation reserve and using the latest revalued amount, not original cost, for assets sold after being revalued.
Changes in financial reporting requirements have transformed the fixed asset accounting framework. International Financial Reporting Standards (IFRS) require fixed assets to be recorded at cost, but there are two accounting models – the cost model and the revaluation model. So what’s the difference, and when should you use each? This session will address fixed asset accounting and reporting under both models and how each is accounted for in Release 12.
Website: www.eprentise.com
Twitter: @eprentise
Google+: https://plus.google.com/u/0/+Eprentise/posts
Facebook: https://www.facebook.com/eprentise
The document discusses various methods for calculating depreciation according to Indian accounting standards, including straight-line, declining-balance, half-year convention, and user-defined methods. It also covers calculating depreciation for additional assets, multi-shift operations, and blocks of assets.
The document discusses key concepts regarding property, plant, and equipment (PPE) accounting. It defines PPE as long-term tangible assets used in operations to generate revenue. The cost of PPE includes purchase price and expenditures to prepare the asset for use. Interest incurred during construction may be capitalized. PPE is depreciated over its useful life to allocate cost against profits. The document provides examples of costs included in PPE for land, buildings, and equipment.
The document discusses the treatment of non-financial assets under IAS 16, 17, and 40. It provides an overview of key principles for property, plant, and equipment (PPE), investment property, and leases. For PPE, it covers recognition, measurement, depreciation, and derecognition. It also discusses asset retirement obligations. For investment property, it discusses definitions, initial and subsequent measurement, fair value model, and transfers between classes. For leases, it distinguishes between finance and operating leases and how they are classified and accounted for.
This document summarizes Accounting Standard 6 (AS-6) on depreciation accounting. It defines depreciation and outlines the key features and causes of depreciation. It discusses depreciable assets and the applicability of AS-6. The document also explains the different methods for calculating depreciation and conditions for changing the depreciation method. It provides guidance on the disclosure requirements for depreciation as per AS-6 and concludes with important points about the standard.
Hi Everyone,
In this Powerpoint Presentation I have discussed about the Accounting Standard-10 on Property, Plant & Equipment issued by ICAI. I have covered all the major topics such as measurement of PPE, Depreciation(Which was previously covered under AS-6 now deleted), Initial Recognition, Subsequent Recognition etc.
Accounting provides economic information to support business decisions. The three main financial statements are the income statement, balance sheet, and cash flow statement. The balance sheet presents assets, liabilities, and owner's equity on a given date to show the resources and how they are financed. Key assets include fixed assets, current assets, and inventory. The income statement matches revenues and expenses over a period to determine profit or loss.
Property, plant and equipment (PPE) refers to tangible assets that are held for use in the production or supply of goods and services, for rental to others, or for administrative purposes, and are expected to be used during more than one period. PPE is initially recognized at cost, which includes purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to operate. PPE can be depreciated using methods like straight-line or diminishing balance. Depreciation is systematically allocated over the useful life of the asset and begins when the asset is available for use. PPE can also be revalued to fair value with any gains or losses reported in other comprehensive income.
Depreciation refers to the reduction in value of fixed assets over their useful life. Fixed assets include property, plant, equipment, and machinery used in a business for over one year. Depreciation is calculated through depreciation expense and accumulated depreciation accounts to allocate the cost of the fixed asset over its life. There are two main methods for calculating depreciation - straight-line depreciation which uses equal amounts over the asset's life, and other methods which may use accelerated amounts over time.
The document is an assignment submission on property, plant, and equipment (PPE) accounting according to IAS 16. It includes an overview of IAS 16, definitions, objectives, scope, recognition criteria, initial and subsequent measurement, depreciation, impairment testing, and disclosure requirements for PPE. The assignment was submitted to a lecturer at Green University of Bangladesh by two students for their Advanced Accounting course.
ISSUES ,GUIDELINES AND STANDARDS OF DEPRECIATION OF FIXED ASSETSZain Sahibzada
The document discusses guidelines for accounting for fixed assets according to IAS 16. It addresses issues such as recognition of assets at cost, measurement of cost, impairment losses, and depreciation. For depreciation, it describes methods like straight line, diminishing balance, and units of production. Guidelines state an asset is recognized at cost if future benefits are probable and cost reliable, and is measured at cost less depreciation and impairment over time.
This document summarizes Accounting Standard 10 regarding fixed assets. It defines fixed assets as assets held for use in producing goods or services rather than for sale. It outlines the components that make up the cost of fixed assets, such as purchase price, duties, and costs to ready the asset for use. It also discusses accounting for asset exchanges, capitalization, asset revaluation, disposal and retirement of fixed assets. Certain assets like natural resources and real estate development are excluded. The standard provides guidance on topics like self-constructed assets, goodwill, patents, and disclosure requirements.
Depreciation is the permanent and gradual decline in the value of fixed assets over time due to wear and tear, effluxion of time, or obsolescence. It is a process of allocating the cost of a fixed asset over its useful life and is based on factors like the asset's cost, estimated useful life, and estimated residual value. Depreciation is calculated using methods like the straight-line method, diminishing balance method, or units of production method and is important for determining accurate profits, financial position, and asset values.
International Accounting Standard (IAS-16) Property, Plant & EquipmentMoeez Hassan
Property Plant & Equipment are tangible assets held for use in production or supply of goods and services for more than one period. The document discusses the initial recognition and measurement of PPE, depreciation methods, revaluation, impairment, and disclosure requirements under IAS 16. Key points include how to determine the cost of PPE, calculate depreciation using methods like straight-line and reducing balance, assess impairment, account for revaluations, and financial statement disclosure requirements.
Fixed tangible assets include land, buildings, plant and machinery, equipment, furniture, vehicles, and leasehold improvements. The cost of fixed assets includes the purchase price plus any additional expenditures incurred until the asset is ready for its intended use. Fixed assets are depreciated over their useful lives to match the cost to the periods benefited from use. Depreciation methods include straight line and written down value and aim to reflect the asset's declining value each year.
The document discusses SAP's Joint Venture Accounting (JVA) software for tracking expenditures in joint ventures in the oil and gas industry. It states that SAP JVA allows users to track expenditures on a venture-by-venture and partner-by-partner basis in real-time. It is fully integrated with SAP modules like FI, CO, AM, MM, PP, and PS. Key features include detailed data capture, cash calls, partner billing, overhead calculations, and multi-currency support. The software also supports equity changes, farm-ins/farm-outs, and real-time gross/net venture reporting.
Financial Model Logical Operation Presentation for Captive Power PlantS. W. Leung
The document outlines the inputs, calculations, and outputs of a financial model for valuing a captive power plant. The model includes assumptions for power purchase agreements, operating costs, capital expenditures, tax calculations, debt financing, and produces outputs such as equity IRR, project IRR, cash flows, income statements, balance sheets, and debt metrics. Calculations incorporate 100% ownership projections as well as projections for a 37.5% stake. The model is designed to value the plant and determine an acceptable purchase price.
The document provides an overview of Accounting Standard 6 (AS-6) on Depreciation Accounting and Accounting Standard 28 (AS-28) on Impairment of Assets. AS-6 deals with the disclosure of accounting policies for depreciation and defines depreciable assets. AS-28 introduces the concept of impairment of assets below their carrying amount and provides indicators and methods for calculating impairment losses. Key terms like carrying amount and recoverable amount are also defined related to impairment assessment of assets.
This document summarizes Accounting Standard 10 on Property, Plant and Equipment. It describes the objectives, scope, definitions and accounting treatment for PPE. Key points include: the standard establishes principles for recognition, measurement, presentation and disclosure of PPE; assets qualifying as PPE must be held for use in production or supply of goods/services and have a useful life of more than one year; PPE is initially measured at cost and subsequently using either the cost or revaluation model; depreciation is charged over the useful life of an asset using methods like straight line or diminishing balance; and gains or losses on disposal of PPE are included in profit or loss.
This document provides an overview of IAS 16, which establishes the accounting requirements for property, plant and equipment. It defines key terms, outlines the requirements for recognition, measurement, depreciation, impairment, derecognition and disclosure of property, plant and equipment. The standard aims to prescribe the accounting treatment for PPE, including how to determine the carrying amount and calculate depreciation charges and impairment losses. It applies to tangible items used in operations or for administrative purposes that are expected to be used for more than one period.
This document provides guidelines for accounting for and reporting fixed assets according to Generally Accepted Accounting Principles and Governmental Accounting Standards Board Statement 34. It defines what qualifies as a capital asset and establishes capitalization thresholds. It also outlines the classification, acquisition costs, donations, and categories of fixed assets including land, land improvements, buildings, equipment, and infrastructure.
Changes in financial reporting requirements have transformed the fixed asset accounting framework. International Financial Reporting Standards (IFRS) require fixed assets to be recorded at cost, but there are two accounting models – the cost model and the revaluation model. So what’s the difference, and when should you use each? This session will address fixed asset accounting and reporting under both models and how each is accounted for in Release 12.
Website: www.eprentise.com
Twitter: @eprentise
Google+: https://plus.google.com/u/0/+Eprentise/posts
Facebook: https://www.facebook.com/eprentise
The document discusses various methods for calculating depreciation according to Indian accounting standards, including straight-line, declining-balance, half-year convention, and user-defined methods. It also covers calculating depreciation for additional assets, multi-shift operations, and blocks of assets.
The document discusses key concepts regarding property, plant, and equipment (PPE) accounting. It defines PPE as long-term tangible assets used in operations to generate revenue. The cost of PPE includes purchase price and expenditures to prepare the asset for use. Interest incurred during construction may be capitalized. PPE is depreciated over its useful life to allocate cost against profits. The document provides examples of costs included in PPE for land, buildings, and equipment.
The document discusses the treatment of non-financial assets under IAS 16, 17, and 40. It provides an overview of key principles for property, plant, and equipment (PPE), investment property, and leases. For PPE, it covers recognition, measurement, depreciation, and derecognition. It also discusses asset retirement obligations. For investment property, it discusses definitions, initial and subsequent measurement, fair value model, and transfers between classes. For leases, it distinguishes between finance and operating leases and how they are classified and accounted for.
This document summarizes Accounting Standard 6 (AS-6) on depreciation accounting. It defines depreciation and outlines the key features and causes of depreciation. It discusses depreciable assets and the applicability of AS-6. The document also explains the different methods for calculating depreciation and conditions for changing the depreciation method. It provides guidance on the disclosure requirements for depreciation as per AS-6 and concludes with important points about the standard.
Hi Everyone,
In this Powerpoint Presentation I have discussed about the Accounting Standard-10 on Property, Plant & Equipment issued by ICAI. I have covered all the major topics such as measurement of PPE, Depreciation(Which was previously covered under AS-6 now deleted), Initial Recognition, Subsequent Recognition etc.
Accounting provides economic information to support business decisions. The three main financial statements are the income statement, balance sheet, and cash flow statement. The balance sheet presents assets, liabilities, and owner's equity on a given date to show the resources and how they are financed. Key assets include fixed assets, current assets, and inventory. The income statement matches revenues and expenses over a period to determine profit or loss.
Property, plant and equipment (PPE) refers to tangible assets that are held for use in the production or supply of goods and services, for rental to others, or for administrative purposes, and are expected to be used during more than one period. PPE is initially recognized at cost, which includes purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to operate. PPE can be depreciated using methods like straight-line or diminishing balance. Depreciation is systematically allocated over the useful life of the asset and begins when the asset is available for use. PPE can also be revalued to fair value with any gains or losses reported in other comprehensive income.
Depreciation refers to the reduction in value of fixed assets over their useful life. Fixed assets include property, plant, equipment, and machinery used in a business for over one year. Depreciation is calculated through depreciation expense and accumulated depreciation accounts to allocate the cost of the fixed asset over its life. There are two main methods for calculating depreciation - straight-line depreciation which uses equal amounts over the asset's life, and other methods which may use accelerated amounts over time.
The document is an assignment submission on property, plant, and equipment (PPE) accounting according to IAS 16. It includes an overview of IAS 16, definitions, objectives, scope, recognition criteria, initial and subsequent measurement, depreciation, impairment testing, and disclosure requirements for PPE. The assignment was submitted to a lecturer at Green University of Bangladesh by two students for their Advanced Accounting course.
ISSUES ,GUIDELINES AND STANDARDS OF DEPRECIATION OF FIXED ASSETSZain Sahibzada
The document discusses guidelines for accounting for fixed assets according to IAS 16. It addresses issues such as recognition of assets at cost, measurement of cost, impairment losses, and depreciation. For depreciation, it describes methods like straight line, diminishing balance, and units of production. Guidelines state an asset is recognized at cost if future benefits are probable and cost reliable, and is measured at cost less depreciation and impairment over time.
This document summarizes Accounting Standard 10 regarding fixed assets. It defines fixed assets as assets held for use in producing goods or services rather than for sale. It outlines the components that make up the cost of fixed assets, such as purchase price, duties, and costs to ready the asset for use. It also discusses accounting for asset exchanges, capitalization, asset revaluation, disposal and retirement of fixed assets. Certain assets like natural resources and real estate development are excluded. The standard provides guidance on topics like self-constructed assets, goodwill, patents, and disclosure requirements.
Depreciation is the permanent and gradual decline in the value of fixed assets over time due to wear and tear, effluxion of time, or obsolescence. It is a process of allocating the cost of a fixed asset over its useful life and is based on factors like the asset's cost, estimated useful life, and estimated residual value. Depreciation is calculated using methods like the straight-line method, diminishing balance method, or units of production method and is important for determining accurate profits, financial position, and asset values.
International Accounting Standard (IAS-16) Property, Plant & EquipmentMoeez Hassan
Property Plant & Equipment are tangible assets held for use in production or supply of goods and services for more than one period. The document discusses the initial recognition and measurement of PPE, depreciation methods, revaluation, impairment, and disclosure requirements under IAS 16. Key points include how to determine the cost of PPE, calculate depreciation using methods like straight-line and reducing balance, assess impairment, account for revaluations, and financial statement disclosure requirements.
Fixed tangible assets include land, buildings, plant and machinery, equipment, furniture, vehicles, and leasehold improvements. The cost of fixed assets includes the purchase price plus any additional expenditures incurred until the asset is ready for its intended use. Fixed assets are depreciated over their useful lives to match the cost to the periods benefited from use. Depreciation methods include straight line and written down value and aim to reflect the asset's declining value each year.
The document discusses SAP's Joint Venture Accounting (JVA) software for tracking expenditures in joint ventures in the oil and gas industry. It states that SAP JVA allows users to track expenditures on a venture-by-venture and partner-by-partner basis in real-time. It is fully integrated with SAP modules like FI, CO, AM, MM, PP, and PS. Key features include detailed data capture, cash calls, partner billing, overhead calculations, and multi-currency support. The software also supports equity changes, farm-ins/farm-outs, and real-time gross/net venture reporting.
Financial Model Logical Operation Presentation for Captive Power PlantS. W. Leung
The document outlines the inputs, calculations, and outputs of a financial model for valuing a captive power plant. The model includes assumptions for power purchase agreements, operating costs, capital expenditures, tax calculations, debt financing, and produces outputs such as equity IRR, project IRR, cash flows, income statements, balance sheets, and debt metrics. Calculations incorporate 100% ownership projections as well as projections for a 37.5% stake. The model is designed to value the plant and determine an acceptable purchase price.
The document provides an overview of Accounting Standard 6 (AS-6) on Depreciation Accounting and Accounting Standard 28 (AS-28) on Impairment of Assets. AS-6 deals with the disclosure of accounting policies for depreciation and defines depreciable assets. AS-28 introduces the concept of impairment of assets below their carrying amount and provides indicators and methods for calculating impairment losses. Key terms like carrying amount and recoverable amount are also defined related to impairment assessment of assets.
This document summarizes Accounting Standard 10 on Property, Plant and Equipment. It describes the objectives, scope, definitions and accounting treatment for PPE. Key points include: the standard establishes principles for recognition, measurement, presentation and disclosure of PPE; assets qualifying as PPE must be held for use in production or supply of goods/services and have a useful life of more than one year; PPE is initially measured at cost and subsequently using either the cost or revaluation model; depreciation is charged over the useful life of an asset using methods like straight line or diminishing balance; and gains or losses on disposal of PPE are included in profit or loss.
This document provides an overview of IAS 16, which establishes the accounting requirements for property, plant and equipment. It defines key terms, outlines the requirements for recognition, measurement, depreciation, impairment, derecognition and disclosure of property, plant and equipment. The standard aims to prescribe the accounting treatment for PPE, including how to determine the carrying amount and calculate depreciation charges and impairment losses. It applies to tangible items used in operations or for administrative purposes that are expected to be used for more than one period.
This document provides guidelines for accounting for and reporting fixed assets according to Generally Accepted Accounting Principles and Governmental Accounting Standards Board Statement 34. It defines what qualifies as a capital asset and establishes capitalization thresholds. It also outlines the classification, acquisition costs, donations, and categories of fixed assets including land, land improvements, buildings, equipment, and infrastructure.
ch10-Acquisition and disposition of PPE.pptmorium2
This chapter discusses accounting for property, plant, and equipment. It describes how PP&E assets are initially valued at historical cost, including acquisition costs. It also discusses accounting for self-constructed assets and interest capitalization. The chapter explains how costs after acquisition are treated, including capitalizing improvements versus expensing repairs. It concludes by covering accounting for dispositions of PP&E assets.
This chapter discusses accounting for property, plant, and equipment (PP&E). It describes how PP&E assets are initially valued at historical cost, including acquisition costs. It also discusses accounting for self-constructed assets and interest capitalization during construction. The chapter covers accounting for costs after acquisition, including capitalizing improvements versus expensing repairs. It concludes with the accounting treatment for disposal of PP&E assets.
The document discusses Indian accounting standards, including the meaning and benefits of accounting standards. It provides details on several specific accounting standards such as AS1 on disclosure of accounting policies, AS6 on depreciation accounting, AS9 on revenue recognition, and AS10 on accounting for fixed assets. The standards cover topics such as selection and disclosure of accounting policies, methods of depreciation, timing of revenue recognition, calculation of costs of fixed assets, and revaluation of fixed assets. The overall objective of the accounting standards is to standardize different accounting policies and practices in India.
This document summarizes a webinar on revenue requirements and the regulatory asset base (RAB) for price regulation. It discusses how regulators set revenue requirements by determining allowable operating expenditures and capital costs, including depreciation and return on the RAB. It also describes approaches to calculating the RAB, including treatments of investments, working capital, and asset valuation methods like historic cost and replacement cost.
The document provides information about Brian Wages, a tax credits and incentives specialist. It summarizes Brian's background, areas of expertise in tax credits, and contact information. It then provides summaries of cost segregation, R&D tax credits, and green energy incentives. Cost segregation allows identifying property costs that can be depreciated faster. R&D tax credits require qualified research activities. Green energy incentives include section 179D deductions and solar investment tax credits. The document aims to educate manufacturers on available tax savings opportunities.
The document discusses cost segregation, which identifies property components as either personal property or land improvements under tax code to shorten depreciation times and reduce taxes. It notes the IRS considers cost segregation a lucrative tax strategy that should be used for most commercial real estate purchases. The document then provides an overview of the legal framework around cost segregation, including IRS revenue procedures, rulings, and a court case. It also references the IRS Cost Segregation Audit Techniques Guide and notes the IRS prefers studies be conducted by those with construction expertise.
Capital Project Funds are used to account for financial resources used to acquire or construct major capital assets like land, buildings, infrastructure, and equipment. Projects are usually large expenditures that result in long-lived assets. Once a project is complete, any remaining funds are transferred to other funds like debt service funds. Transactions are recorded using journal entries to debit expenses and credit the capital project fund. At the end of the project, the fund is closed out and any remaining balance is transferred to other funds.
Project cost management involves planning, estimating, budgeting, and controlling costs throughout a project's lifecycle. It is important for project managers to emphasize realistic cost estimates, understand principles like profits and cash flow, and classify costs as direct, indirect, tangible, or intangible. Using tools like life cycle costing and establishing reserves can help project managers stay on budget.
This document discusses best practices for facility renewal planning. It recommends using a facility condition assessment or mathematical model to determine appropriate spending levels and identify needed capital expenditures. A detailed engineering survey provides the most accurate information but is also the most costly. The document emphasizes that facility renewal involves replacing building subsystems and components at the end of their lifespan, rather than ongoing maintenance, to ensure facilities are properly supported over the long term.
This document discusses project financing and financial analysis. It provides details on determining total investment costs, which include initial investment costs like land, buildings, equipment, and working capital. Production costs are also broken down, including factory costs, overhead, depreciation, and financing costs. Financial ratios are discussed to facilitate analysis, comparison of projects, and determine financial risk. The net present value and internal rate of return are introduced as metrics to evaluate project viability.
This document discusses project financing and feasibility analysis. It explains that a feasibility study helps determine if a proposed project will be financially viable by assessing if it can service debt obligations and provide expected returns. The study estimates total investment costs, production costs, and financial/economic viability by assembling components like land, construction, equipment, labor, and implementation costs. It also discusses calculating fixed costs, pre-production capital, working capital, and production costs with contingencies for price increases and unexpected events. The timing of expenditures and costs is important as it influences cash flow and return.
This document discusses several topics related to financial analysis of properties and engineering economics, including:
1) It defines property and financial terms, and discusses investing in property versus financial investments.
2) It covers factors that influence property value such as economic growth, land use changes, and location.
3) It provides an overview of engineering economics topics such as time value of money, alternatives analysis, discount rates, and factors considered in analyses.
The document provides an overview of accounting principles for upstream oil and gas, including PSC accounting. It discusses the full cost and successful efforts accounting methods, accounting for acquisition, exploration, development and production costs. PSC accounting differs in its treatment of these costs compared to GAAP. Specifically, under PSC accounting certain exploration and development expenditures are expensed rather than capitalized. The document also covers other PSC considerations like cost recovery, domestic market obligations and investment credits.
Financial analysis and appraisal of projects.pptxJaafar47
This document summarizes guidelines for conducting financial analysis of projects. It discusses identifying and quantifying costs and benefits, classifying costs as tangible or intangible, and valuing costs and benefits using market prices. It also covers investment profitability analysis methods like payback period, net present value, internal rate of return, and profitability index. Specifically, it provides examples of calculating payback period for projects with both unequal and uniform cash flows to illustrate the method.
The document discusses accounting for fixed assets and depreciation. It defines fixed assets and lists costs that can be included in the initial cost of acquiring buildings, machinery, equipment, and land. It also discusses capital vs revenue expenditures and how to account for them. The document explains different depreciation methods including straight-line, units-of-production, and double-declining balance. It provides examples of calculating depreciation expense under each method.
It is the economic consideration like cost estimation,capital investment,profitability and total product cost. It also includes various types of each, calculation and ratios
- Depreciation is an accounting process where a company allocates the cost of an asset over its useful life. It records how the value of an asset declines over time.
- Each year, a company records a depreciation expense to allocate a portion of the asset's cost to that fiscal year. This spreads the initial cost of the asset over its useful life.
- There are different methods for calculating and recording depreciation expenses, but the goal is to allocate an asset's cost over its useful life and reflect its declining value on the company's financial statements. Depreciation is a non-cash expense that impacts metrics like EBITDA that are used to analyze company profitability.
Similar to Capital Assets - Idenitification & Compilatio (20)
2022 Rea & Associates' Cybersecurity Conference Rea & Associates
The speaker discusses changes to the Cybersecurity Maturity Model Certification (CMMC) program over the past year, including changes to the CMMC model, rules, and the organization administering the program. Voluntary assessments are now taking place and the CMMC ecosystem of assessors, trainers, and consultants is developing. Remaining challenges include high costs of compliance, legal consequences, reciprocity between government agencies, and issues with cloud computing. The speaker stresses the importance of ethics and offers that help is available for organizations navigating CMMC requirements.
Rea & Associates - 4th Annual Construction KickoffRea & Associates
Rea & Associates is proud to present the 4th Annual Construction Kickoff on Wednesday, January 26, 2022, at The Ohio State University Fawcett Center. Joined by Overmyer Hall and Kegler Brown, this free, in-person event will provide you with high-level updates, open discussions, and exclusive content for business leaders in the construction industry. You can expect a glimpse into the current and future considerations of the construction industry regarding tax, insurance, liability, and more!
This year, we are proud to be back in person for the fifth annual Manufacturing Education Day on October 29, 2021. As the year comes to an end Rea & Associates is thrilled to bring together top industry experts to support the ongoing success of the manufacturing industry.
Whether you manufacture pallets, pivoted your core products, or are looking for great insight, register today to ensure you don’t miss this essential event!
HR Compliance & Insurance Benefit Perspectives: What Employers Should Be Awar...Rea & Associates
Guidelines for employees are constantly changing but it’s important that businesses stay on top of mandates and regulations. What risks should organizations be informed about? Is your organization able to have varied insurance premiums for vaccinated vs. non-vaccinated employees?
Join Rea & Associates and Huntington Insurance for a deep dive into best practices for exposures, insurance perspectives, and vaccine mandates and regulations.
LIVE EVENT - 3rd Annual Fall Construction Risk Update - September 30Rea & Associates
If the last two years have taught us anything, it’s that you can never be too prepared. Rea & Associates is proud to present the 3rd Annual Fall Construction Risk Update event, jam packed with expert commentary and exclusive content for business owners in the construction industry. This year, we’re here to guide you through the changes 2021 brought to taxes, finances, liability, and more and give you a glimpse into future considerations for construction industry leaders.
[ON-DEMAND WEBINAR] COVID 2.0 | Tips To Address New Cases, Mask Mandates, & V...Rea & Associates
Continued hospitalizations, new COVID variants, reemerging mask mandates, and further discussions around vaccination requirements in the workplace make it clear that the COVID crisis is far from over. Needless to say, there's a lot of worry and an avalanche of questions from business owners and community leaders at any given moment. What are you doing to prepare for COVID crisis 2.0?
Join Rea & Associates and Critchfield, Critchfield & Johnston for a free, hour-long webinar that will help your small- to mid-sized businesses prepare for the next wave of COVID while protecting your organization and employees during continued uncertainty. Our HR and legal experts will be on hand to answer your questions regarding new COVID cases, CDC guidelines, FFCRA leave, vaccination requirements, and more
Learn More About The COVID 2.0 Crisis From Industry Experts
Join Renee West, SHRM-SCP, PHR, senior manager and HR consulting lead at Rea & Associates, and Kimberly Hall, chair of the employment law practice group at Critchfield, Critchfield & Johnston, to learn answers to some of the most frequently asked questions regarding COVID this fall. Specifically, during this free, one-hour long presentation, attendees will learn more about:
- How to handle new positive COVID cases among employees.
- Ensuring there is proper COVID protocol established for your organization and safety guidelines already in place.
- Whether your business can require vaccination and if such a policy makes sense for your business.
- Can employers require a vaccine for employees.
- How the delta variant covid threat is different.
- If mask mandates are coming back and whether employers can implement such requirements.
- Insight into OSHA guidance
- What to do to protect your business from a compliance standpoint.
Insight into CDC guidelines, FFCRA, and much more!
The duo will also set aside time during the presentation to answer your questions on the subject of COVID and how your business can address specific challenges.
#COVID2.0 #vaccinations #maskmandates #HRConsulting #OhioCPAF irm
[ON-DEMAND WEBINAR] Revealing The State & Local Tax Considerations Of A Remot...Rea & Associates
Tax Consequences Holding You Back From Deploying A Remote Workforce?
As remote work continues to overtake the traditional workforce, organizations must understand state and local tax considerations for their remote employees before adopting such a policy. Due to quick changes in the work environment and work-from-home arrangements many tax consequences that may result in your business reconsidering the deployment of a remote workforce. Fortunately, state and local tax leader and a principal with Rea & Associates, Kathy LaMonica, will be on hand to explain what businesses are up against. She will also be taking your questions throughout the presentation. Read on to discover what you will hear during this free, hour-long webinar.
State & Local Tax Guidance To Guide Your Remote Workforce Decision
Join Rea & Associates for a free, hour-long webinar to gain insight on tax law updates, remote work implications, what land mines you need to be aware of when registering for payroll taxes in new states, and more. During this event, you will:
- Gain insight on the Wayfair decision, and recent updates that may affect your business 3 years later.
- Take a deep dive into the State and Local direct and indirect tax concerns when hiring remote workers.
- Receive an update on Ohio Municipal Tax legal challenges.
- Tune in for predictions of where the states may be headed with the taxability of services and digital products, and how that may affect your compliance requirements.
- And more!
Kathy, an income principal on the firm's state and local tax team, focuses on sales and use tax consulting, compliance, and implementing technology solutions for businesses and organizations that continue to struggle with the various tax laws found throughout the nation. Since COVID-19 emerged and the topic of working remote took center stage, she has been tracking the implications associated with deploying a remote workforce. You won't want to miss this one!
#ReaCPA #State&LocalTax #RemoteEmployees
[ON-DEMAND WEBINAR] How To Hire More Employees & Keep Them Happy: Tips To Att...Rea & Associates
Businesses are facing a talent shortage as, these days, it's a job-seeking market. Prospective employees are able to be pickier when it comes to choosing the organization they would like to build a career with. From the outside looking in, how is your organization viewed? Attracting and retaining key talent is fundamental to your organization's success. Understanding best practices and following strategic employer resources could lead your organization to become an employer of choice. If you are determined to hire more employees in the coming months or years, register for this free webinar.
Renee West, SHRM-SCP, lead HR consultant and leader of Rea & Associates' HR consulting practice will share tips that will help you better position your organization in today's competitive marketplace. She will also talk about company culture and how yours can help bring more employees in the door and encourage them to stay. These professional services tips will help you identify ideal employees and keep them for the long term.
Hire More Employees With These Learning Objectives
Those looking to hire more employees and keep them happy once they get there to reduce employee turnover should check out this free, hour-long webinar to achieve the following learning objectives. You will:
- Gain insight on strategic recruitment and practices to help attract key talent and retain talent.
- Dive deep into state resources, including Ohio Means Jobs, and credits for employers to grow and develop current employees.
- Learn how to implement internal recruitment programs, including internship initiatives, apprenticeships, and referral incentives.
- Break down employee retention strategies and the benefits and compensation strategies employers should have in place to keep existing employees happy and on the payroll.
- And so much more ...
#ReaCPA #HRSolutions #HireBetter
[ON-DEMAND WEBINAR] Managed Service Providers vs Managed Security Service Pro...Rea & Associates
With an increase in remote work worldwide, data security measures should be top of mind. Ensuring your IT systems are operational, and your data and systems are safe, secure, and compliant should be one of your organization's top priorities. Unfortunately, many businesses, organizations, and entities mistakingly believe that their systems are completely protected by the existing relationships owners have developed with their managed service providers. That's not necessarily the case. Join Rea & Associates' Cybersecurity Services Team for a free, hour-long webinar taking a deep dive into understanding the difference between your Managed Service Providers (MSP) and Managed Security Service Providers (MSSP). Our cyber professionals will tell you everything you need to know when it comes to MSPs vs. MSSPs.
Shawn Richardson, principal and director of cybersecurity and data protection services, and Jorn Baxstrom, a cyber consultant with the firm, experts in the MSSP space, will provide you with insight into the differences of each role. Additionally, they will provide insight that will help you choose the right vendors and third-party service providers when it comes to protecting your organization, employees, and clients.
Plan to sit in on this informative session. Attendees will ...
- Be treated to a deep dive into the differences between Managed Service Providers and Managed Security Service Providers.
- Gain an understanding of your MSSPs role and where they provide support for your security program.
- Discover what the CIA Triad is and why is it important for your organization's cybersecurity infrastructure.?
- And so much more ...
Find out how outsourced cybersecurity services and managed detection and response services are essential to threat hunting and protecting your business. If you would like to learn more about MSPs vs. MSSPs, check out the following resources, including the following episodes from Rea & Associates' award-winning weekly business podcast, unsuitable on Rea Radio:
https://www.reacpa.com/insight/episode-276-msp-versus-mssp-whats-the-difference/
https://www.reacpa.com/insight/are-you-managing-your-cybersecurity-risk-exposure/
https://www.reacpa.com/insight/perspectives-what-does-the-it-department-do/
#MSSP #CyberServices #BusinessProtection #ReaCPA
[ON-DEMAND WEBINAR] CPA Pros Prepare For The 2020 Medicaid School Program (MSP)Rea & Associates
Clarifying The Cost Report, Agreed-Upon Procedures, And More
It feels like we just completed the round of Medicaid school program (MSP) cost reports and agreed-upon procedures for the period ending June 30, 2019 – and here we are starting the process of collecting data for the period ending June 30, 2020. The completion of the June 30, 2019 engagements resulted in the Ohio Department of Medicaid issuing approximately $75 million in cost settlements! We know how important this program is to all of you, and we want to work with you to get this next round completed.
To get ready for this next round, we would like to invite all of you to this free, hour-long webinar. The MSP team from Rea & Associates will provide you tips for preparing for this round of agreed-upon procedures, a section-by-section update, and common issues we identify during the engagement.
Find out why it's important for iep parental consent and how agreed upon procedures can put your district in a position to succeed.
Ready To Learn About The 2020 Medicaid School Program?
During this free, hour-long webinar for Ohio school districts, you'll:
- Gain insight on how to prepare for agreed-upon procedures.
- A section-by-section walkthrough with industry professionals and tips on how to identify and avoid potential hurdles.
- Insight on common issues that may arise during the engagement.
- And so much more ...
This informative webinar is presented by two leaders on Rea & Associates government services team, Zac Morris and Ken Richards. The duo is coming prepared to present the insight and technical information you need to ensure compliance with the 2020 Medicaid School Program. For more information, visit the Rea & Associates' website at https://www.reacpa.com.
As a top 100 CPA firm and professional services organization, Rea's government services team is committed to providing you with the tools and insight you need to drive effectiveness and efficiency throughout your entity.
#MedicaidSchoolProgram #CostReporting #AgreedUponProcedures #ReaCPA
[ON-DEMAND RECORDING] Deep Impact: Is Your Manufacturing Company On A Collisi...Rea & Associates
CMMC (Cybersecurity Maturity Model Certification) brings together a standard for the implementation of cybersecurity for those companies doing or wanting to do business with the Department of Defense (DoD). The framework includes comprehensive, and scalable certification elements to verify your implementation of process and practices associated with the cybersecurity maturity level your organization needs to achieve to win proposals. This on-demand webinar presentation featuring Andrew Geiser, a senior manager on Rea & Associates' manufacturing and distribution team, and Ty Whittenburg, a senior information systems analyst on the firm's cybersecurity and data protection, will explain how will CMMC impact manufacturing companies. The duo will also go through the various levels associated with CMMC and explain how to know which CMMC level you need based on your company's business model.
This presentation is co-sponsored by Rea & Associates and the Southeast Ohio MEP and is designed to provide insight on CMMC standards for your Manufacturing organization.
During this free webinar, you will hear how CMMC compliance aligns with NIST 800-171, NIST 800-53, and whether your organization need to comply with specific CMMC levels, including CMMC level 3.
For more information, contact Andrew or Ty directly or visit https:www.reacpa.com for more.
#CMMC #DepartmentOfDefense #cybersecurity
[ON-DEMAND WEBINAR] Security Wars: Episode 2 | CMMC: Return of The Process Fo...Rea & Associates
This document introduces three individuals and provides brief summaries of their roles:
Ty Whittenburg is a Senior Information Assurance Manager at Rea & Associates who ensures organizations' technology and networks support business objectives through cybersecurity work.
Matt Moneypenny is the lead Marketing and Sales Analyst at Etactics and previously served as a content strategist after graduating from The University of Akron.
Zach Getz is the Senior Software Developer at Etactics who oversees development of their compliance management technology to help organizations navigate regulations.
Large-scale cyber-attacks continue to take down businesses large and small. What are you doing to protect and manage the cybersecurity risk exposure of your business in the event of a cyber-attack in accordance with new government guidelines?
During this free, 45-minute webinar, cyber professionals from Rea & Associates and Oswald Companies provide you the insight necessary to identify risks to your existing cybersecurity and data protection framework, protect your company from bad actors, and adhere to the Department of Defense's regulations.
What You'll Learn About Cybersecurity Risk Exposure
By the end of this informational webinar, participants will be able to ...
- Gain insight on current ransomware breaches and the existing cybersecurity threat landscape while touching on the recent Microsoft Exchange and Solarwinds hacks.
- Understand the best controls and processes for your company and how to determine your organization's cybersecurity model.
- Determining your organization's cybersecurity maturity and the best cyber policy for your current needs while making room for growth.
During this webinar, you will also hear cyber liability insurance explained by cyber insurance experts from Oswald companies. You'll learn the ins and outs of asset management so if a data breach ever does occur in your company, you'll be ready. Furthermore, you'll discover the importance of a thorough risk assessment and how to move forward with one of your own. Don't miss this free webinar!
If you would like to learn more, visit https://www.reacpa.com.
[ON-DEMAND WEBINAR] Covid Vaccine & HIPAA: Can Employers To Receive The COVID...Rea & Associates
As the COVID-19 vaccine continues to roll out, understanding how to navigate and conduct neutral conversations in the workplace is becoming a priority. How can you inform your employees about vaccine options, but stay HIPAA compliant and abide by legal limitations? Are you allowed to require employees to be vaccinated? What can you ask your employees about their vaccine history?
Join Rea & Associates and Critchfield, Critchfield & Johnston for a free, hour-long webinar, to gain insight about the COVID-19 vaccine, employer and employee resources from a human resource and legal perspective, CDC guidelines for continued employee safety, and more!
This informative webinar presented by Renee West, SHRM-SCP, PHR, a senior manager and HR consulting lead at Rea & Associates, and Kimberly Hall, a legal expert with Critchfield, Critchfield & Johnston, Ltd., will address the following points.
What You'll Hear About The COVID Vaccine:
- How mandating a vaccine could impact employee relations.
- Guidance on how to navigate and conduct employee discussions about the vaccination.
- Gain insight on best practices and the legal limitations on mandatory vaccination policies.
- Whether is it legal for employers to mandate that employees receive the COVID-19 vaccine as a condition of employment?
- Employer and employee resources regarding COVID-19 vaccines, CDC guidelines for continued employee safety, HIPAA compliance.
- Additionally, the duo will set aside a significant portion of time to address your specific questions at the end of their formal presentation.
- Changes made to the FFCRA.
If you would like to learn more about this topic or Rea & Associates, visit https://www.reacpa.com.
#COVIDvaccine #HRcompliance #FAQ
The Not-So-Obvious Business Implications Of Remote Work:
Organizations of all sizes continue to transition their employees to remote work. While technology may make this type of shift easy, handbook updates, state and local tax considerations, and payroll challenges present areas of concern. This webinar will help owners think about the impact remote work policies might have on your organization.
First, seriously consider whether this type of workplace flexibility is right for your business or organization. Then, upon deciding to move forward, think about the advisors you'll need to reach out to for help. Your advisor team should work to identify a solution that works in the company's financial best interest while maintaining compliance with all applicable tax laws. Of course, be sure to always review your company's existing policies before forging ahead. Finally, think through the importance of writing new guidance for employees to follow and the protection you need to secure for ongoing business protection.
Join Rea & Associates for a free, hour-long webinar, to gain insight from a State & Local Tax perspective. Then you'll gain the insight necessary to better understand policies and procedures from a Human Resource professional. Wrapping up, our trio of subject matter experts will review some of the biggest land mines you need to be aware of when registering for payroll taxes in new states, and more!
What You'll Hear
During this presentation, you'll hear about the impact remote work could have on your various parts of your organization, including your:
- Tax Bill - Learn why employing out-of-state team members may impact your business's tax liability. Be sure to understand how a remote work relationship could trigger nexus in new states.
- Company Logistics - Prepare for new “work-from-anywhere programs” and how to manage employees who have decided to work remotely.
- Employee Handbook -What policies and procedures should employers consider pertaining to the remote work environment? Employee accountability, work schedules, performance metrics, and communication timeliness should all be addressed.
- The Rea team and professional services experts will also touch on various other HR policies, sales tax, income tax, and payroll considerations when it comes to managing remote employees
Listen to this episode to learn more or check out the Rea & Associates' website at https://www.reacpa.com to discover how our team of experts can help you!
#WorkingRemote #Nexus #HRconsiderations
EPISODE 1 | Security Wars: A New Goal: CMMC Compliance & Department of Defens...Rea & Associates
Present-day in our galaxy, right here …
The US Department of Defense (DoD) recently developed and established the Cybersecurity Maturity Model Certification (CMMC) as the new standard for the Defense Industrial Base (DIB). More plainly, it’s a certification process that provides assurance to the DoD that a required entity is equipped to protect unclassified information, including any data that transfers between its vendors and partners.
That’s a simplified definition of what a CMMC and CMMC compliance is and it already sounds complicated. It doesn’t have to be, though. Etactics and Rea & Associates have joined forces to break down every facet of this new certification into a comprehensive webinar series entitled Security Wars.
The first webinar in our Security Wars series serves as a necessary introduction to CMMC. Join Matt Moneypenny, senior marketing and sales analyst at Etactics, and Ty Whittenburg, senior information assurance manager at Rea & Associates, as they unpack the DoD’s newest standard by starting with its three maturity levels and their implications on data protection.
#SecurityWarsSeries #CMMC #Cybersecurity
Learn more about Rea & Associates at https://www.reacpa.com
Discover how Etactics can help your business at https://etactics.com/
[ON-DEMAND WEBINAR] Understanding SOC2: A SOC 2 Guide for Managed Service Pro...Rea & Associates
As a managed service provider, securely managing your data to protect the interests of your organization, reinforce the integrity of your business, and ensure the data security of your clients can be a challenge – but it is possible. During this free, hour-long webinar, Brain Garland and Paul Hugenberg, leaders on Rea & Associates' cybersecurity and data protection team, will guide you through SOC 2 compliance, and how this incredible tool can help you leverage your existing data security framework and business model to ensure long-term organizational success and sustainability.
Join us to learn:
- What SOC 2 is and what it is specifically designed to accomplish.
- How SOC 2 can improve your organization’s safety, credibility, and overall profitability.
- When a SOC 2 absolutely necessary to a business’s long-term financial and organizational wellness.
- How CMMC Works With SOC2
To learn more about SOC2, visit https://www.reacpa.com/contact-us/ to reach out to a member of our team.
#SOC2 #ReaCyber #ReaCPA
[ON-DEMAND WEBINAR] Third Annual Construction Industry Kickoff | Rea & Associ...Rea & Associates
After the year we've had, it's only natural to be a little cautious going into 2021. Rea & Associates and Overmyer Hall Associates want to help you start the new year on the right foot with our third annual Construction Kickoff. This year, we will be hitting on best practices and recommendations regarding tax, surety bonds, risk management, PPP, and more. Don't miss this essential event for construction industry leaders.
Presented by Rea & Associates and OBermyer Hall Associates, this three-hour presentation features Doug Houser, Scott Bechtel, Jack Kehl, David Catanese, and Joe Urquhart. The format of the presentation is as follows:
- Economic Outlook and Financing
- Surety Outlook for 2021 and Aftermath of COVID
- Tax Update, Overall Update (PPP, Biden Tax Plan, etc.)
- Risk Management, Need-To-Knows For Insurance Companies
View the presentation today to collect the information necessary for building a successful year in the construction industry.
#ReaCPA #ConstructionBusinessTips #OhioCPAFirm
[ON-DEMAND WEBINAR] New Year, New COVID 19 Vaccine, New Unemployment Rules, N...Rea & Associates
Ringing in the new year is a lot different this time around, particularly if you are a business owner trying to make sense of human resources updates. The rules are a lot different from what they were a year ago and now business owners must shuffle through a slew of updated HR policies and best practices to ensure compliance with ever-changing legislation. Renee West, SHRM-SCP, PHR, senior manager and leader of Rea & Associates' HR consulting services practice, has been committed to following federal and state-wide legislation in order to provide you with key updates to ensure ongoing compliance in your organization.
During this free, hour-long webinar, Renee will go over:
- FFCRA Leave updates and unemployment extension information PUA unemployment details, and unemployment benefits
- COVID 19 vaccine resources for employers
- 2021 HR policies
- Best practices to mitigate risk in 2021.
- And more ...
For more insight into the HR considerations for businesses, visit https://www.reacpa.com
#ReaCPA #HRCompliance #COVIDCrisis
[ON-DEMAND WEBINAR] Next Steps In COVID 19 Protocols & ComplianceRea & Associates
The COVID-19 (coronavirus) crisis continues to show no signs of slowing down and as we proceed toward year-end, businesses continue to be tasked with the seemingly impossible task of maintaining the safety of their employees and customers, while ensuring that the business stays operational. Renee West, HR consultant at Rea & Associates and regional expert in the areas of COVID-19 protocols, human resources compliance, and local, state, and federal safety guidelines will once again share critical insight to help your organization persevere throughout the month of December and beyond.
Join us for this free hour-long on-demand webinar to hear:
- COVID-19 protocol updates and continued compliance resources for employers and employees as cases continue to spike.
- FFCRA leaves and discussion about whether they will be left to expire or will they be extended.
- CDC updates and state mandates pertaining to COVID-19.
#HRBestPractices #COVID19 #ReaCPA
2. Overview
What will we be covering today?
Capital asset policies and thresholds
How to compile capital asset additions
How to keep track of construction in progress
Maintenance/repair vs. capitalize
How to compile capital asset disposals
Estimated useful lives
How to recognize capital asset impairment
3. Audit Implications
Capital assets – most common area for audit
adjustments
Incomplete additions or disposals
Exclusion of architect/engineering services from construction
projects
Leased assets capitalized at incorrect amount or not
capitalized at all
Vehicles recorded net of trade-in
Construction in progress issues
4. Capital Assets vs. Inventory
Capital Assets
Definition: assets that are used in operations and that have
initial useful lives extending beyond a single reporting period
Reported on the entity-wide GAAP financial statements
Original cost of asset exceeds the capitalization threshold
Excludes items acquired for the purpose of sale or
investment, rather than for use in operations
Can be either tangible or intangible
• Intangible examples: software, easements, rights of way, patents
5. Capital Assets vs. Inventory
Inventory
Assets that are consumed in operations and do not extend
beyond a single reporting period
• Examples: office supplies, bus maintenance items, bus fuel
Can also include items held for resale
• Examples: food service inventory, school supplies held for resale
Cost per item typically does not exceed capitalization
threshold
6. Major Classes of Assets
Land
Buildings & Building Improvements
Improvements Other than Buildings
Also called “Land Improvements”
Examples: fences, retaining walls, parking lots, landscaping
Furniture and equipment
Infrastructure
Example: water and sewer lines
Other
Example: software
7. Capitalization Threshold
Accounting standards do not need to be applied to items
that are of only minimal interest to financial statement
users
Materiality – only need to report capital assets if they exceed
a predetermined amount, commonly known as a capitalization
threshold
GFOA recommends a minimum of $5,000
Governments are required by Ohio Administrative Code
(OAC) to report at least 80% of their capital assets
• Keep this rule in mind if you ever increase your threshold (i.e.
increasing your threshold cannot remove more than 20% of amount
previously reported)
8. Determining Which Entity Should Report an
Asset
Not uncommon for one government to acquire a capital
asset for use by another
A particular asset can only be reported on one set of
financial statements
Ownership – normally reported on f/s of government who
owns it, even if it is used by another
When ownership cannot be established, the government
managing the asset will be responsible for reporting.
• Example: Maintenance
9. Identifying Capital Asset Additions
Review BUDLED for 6** object codes
610 Land
620 Buildings
630 Improvements other than buildings
640 Equipment
650 Vehicles
660 School buses
670 Library books (not capitalized by most)
690 Other capital outlay
10. Identifying Capital Asset Additions
(Continued)
Review BUDLED for 418 object codes (professional
services) for architect and engineering costs
Just because construction has not started, does not mean
you do not have any construction in progress (CIP)
All architect, engineering services should be capitalized,
including design services, construction manager fees, etc.
Also be sure to include all OSFC Construction Manager fees
• These should be recorded into USAS via memo journal entries
11. Identifying Capital Asset Additions
(Continued)
Review any new debt agreements entered into during
the year
Most debt has capital assets associated with it
• Exception: HB264 Energy Conservation Loans – many times these
expenditures are deemed maintenance items
Capital leases
Must review lease agreement to determine if it is capital lease
or operating lease
• Any 1 of 4 criteria makes a lease capital (most common are transfer
of ownership to the School District at the end of the lease and a
bargain purchase option (typically $1)
12. Identifying Capital Asset Additions
(Continued)
Capital leases (Continued)
If the lease is a capital lease, you must capitalize the related assets
in the same amount
Assets should be capitalized at the total principal amount of the
capital lease
Common issue – the lease meets the definition of a capital lease,
but the leased items are under the District’s capitalization threshold
• Examples: computers, copiers
• You must treat both the lease and assets the same way (i.e. record the
capital lease liability and the capital assets, or record neither) –
• Recommend discussing this issue with your GAAP preparer and/or
auditors
13. Identifying Capital Asset Additions
(Continued)
Review Board of Education minutes for the following:
Approval of large contracts - ORC requires Board approval for
most contracts > $25,000
Donations of capital assets (since no cash is involved in these
transactions, they will not show up in USAS)
• Example: Booster clubs donating athletic facilities or equipment
14. Determining Cost of Assets
In general – cost of assets also include any “ancillary
charges necessary to place the asset into its intended
location and condition for use” (GASB 34)
Land – includes any land preparation cost that will have
an indefinite useful life
Examples: basic site improvements, including excavation, fill,
grading
Demolition costs are added to land values
Removal of old buildings are considered land costs because
these costs are necessary to get the land in condition for its
intended purpose.
15. Determining Cost of Assets
Tracking Construction in Progress
Can be difficult due to extending over multiple fiscal years
Do not recommend just recording all expenditures in a construction fund
Recommend utilized an excel spreadsheet by vendor (example in
handouts)
Certain project costs may be related to items that should not be
capitalized
• Particularly furniture & fixtures (student desks, chairs, smaller kitchen equipment,
etc)
Once the project is complete, each component will have to be added to
the appropriate class of assets (building, furniture, equipment, etc)
• This can be a monumental task if not tracked during the course of the project!
16. Determining Cost of Assets (Continued)
Shipping and freight charges are included in cost
Installation fees are included in cost
Two exceptions:
Feasibility studies are not capitalizable (because the cost was
incurred prior to a determination of feasibility)
Training employees to operate an asset is not capitalizable
Interest expense incurred during construction
Cannot be capitalized in governmental activities, only enterprise
funds
Assets acquired where credit was given for “trade-ins”
Cash paid for new asset plus remaining undepreciated value of
asset traded in, if any
17. Determining Cost of Assets (Continued)
General and administrative costs should never be capitalized
Examples: overhead (use of office facilities, executive management,
accounting, human resources)
These items should always be expensed
Costs directly related to the acquisition of a specific asset
should always be capitalized
Example: salaries and wages of employees who worked on a
construction project
Costs directly related to the acquisition of capital assets, but
not to specific projects, should still be capitalized
Example: multiple projects going on (allocate to each project)
• Construction administration, legal fees, design fees
18. Determining Cost of Assets (Continued)
Internally developed software has very specific guidance
on what can and cannot be capitalized.
Consult with GAAP preparer or auditor if you need guidance
in this area.
Donated capital assets are reported at FMV at the date
of donation
Best option is appraisal
Also applies to assets purchased for $1 (these are considered
donations)
19. Improvements vs. Repairs & Maintenance
Improvements (betterments)
Provides additional value, which is achieved by one of the
following:
• Lengthening the capital asset’s estimated useful life
• Increasing the capital asset’s ability to provide service
– Example 1: adding an additional lane to a road (increases
capacity for traffic)
– Example 2: reconstructing an asphalt road with concrete
(would extend the original useful life of the asset)
Repairs and maintenance
Retain value rather than provide additional value
20. Improvements vs. Repairs & Maintenance
New Roofs
Assume building has useful live of 80 years, but will need roof
replaced in half that time.
Assume the original roof is included in the cost of the building
Roof replacement does not lengthen the original useful life of
the building, but avoids cutting it in half
Should be treated as a repair rather than as a replacement
These types of items should be addressed in your capital
asset policy.
21. Identifying Capital Asset Disposals
Request disposals from departments
This could include providing a current listing to each
department to review, update and return to Treasurer’s office
Review REVLED for 193* receipt codes
1931 Sale of Fixed Assets
1932 Compensation for Loss of Assets
1933 Sale of Personal Property
1934 Insurance Proceeds
Insurance proceeds could also be indicator of an
impairment of a capital asset (discussed later)
22. Identifying Capital Asset Disposals
(Continued)
Review lease agreements for maturity
If a lease has matured, do you still have the assets?
Did the assets get traded in on new ones?
Review vehicle and school bus purchases made during
the year for “trade-Ins”
23. Impairments of Capital Assets
Definition: a significant and unexpected decrease in the
service utility of a capital asset that will continue to be used in
operation
Indicators of a potential impairment
Physical damage requiring restoration of asset
• Examples: fire, flood damage
Changes in technology that negatively impact asset’s effectiveness
or result in the asset becoming obsolete
Change in the manner an asset is being used
• An instructional building being used for storage (often when a new
building is constructed)
Construction stopped on a project
Development of internal software stopped
24. Impairments of Capital Assets (Continued)
Impairment must be permanent, cannot be temporary
Decline in demand alone does not qualify as an
impairment
It may not be permanent
The use of the asset has not changed
Example: enrollment declines and an elementary school
building is not being used
Outsourcing the operating of a capital asset does not
qualify as an impairment
The use of the asset has not changed (the same services are
being provided)
25. Capital Asset Policies
Most capital asset policies do not contain all the necessary
components
Results in inconsistent treatment
Which items should be capitalized?
Capitalization threshold (typically not < $5,000)
Will each class of assets have the same threshold?
Will the capitalization threshold be applied to individual items or an
entire group if purchased together? (Recommend individual items)
How should fair value be determined for donated assets?
What major classes of assets should be used?
26. Capital Asset Policies (Continued)
How should control be maintained over items not capitalized
(under threshold)?
Best done at the department level
Which items should be tagged?
How should disposals be addressed?
Who can authorize a disposal?
How to ensure it gets reported to the accounting department?
How to ensure the government receives maximum benefit from the
disposal?
How often should a physical inventory of capital assets be
performed? Who will be responsible for performing them?
GFOA recommends once every 5 years
27. Capital Asset Policies (Continued)
Depreciation items
Depreciation method (typically straight line)
• Including method of depreciating for partial years (year of acquisition
and disposal)
– Examples: half year, monthly, full year in year of acquisition and none in
year of disposal
Useful lives for each class of assets
• Can be a range
Salvage value of assets
Definition: estimated proceeds from the eventual disposal of an
asset
Typically zero to ten percent of cost
28. Periodic Physical Inventories
Can be done by a valuation company
If done internally, necessary components:
Data in the accounting records is compared with the actual
physical assets
An exception report is generated
The exception report is used to make any necessary
adjustments to the accounting records
31. Contact Information
Zac Morris, CPA
Senior Manager, Rea & Associates, Inc.
zac.morris@reacpa.com
Office: 330-674-6055
DL: 330-521-4539
Cell: 330-231-2493
Editor's Notes
Lease Determination Criteria:a. The lease transfers ownership of the property to the lessee by the end of the lease term.b. The lease contains a bargain purchase option- (ie., for $1 the lessor may purchase the equipment).c. The lease term is equal to 75 percent or more of the estimated economic life of the leased property. However, if the beginning of the lease term falls within the last 25 percent of the total estimated economic life of the leased property, including earlier years of use, this criterion shall not be used for purposes of classifying the lease.d. The present value at the beginning of the lease term of the minimum lease payments, excluding that portion of the payments representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon, equals or exceeds 90 percent of the excess of the fair value of the leased property to the lessor at the inception of the lease over any related investment tax credit retained by the lessor and expected to be realized by him. However, if the beginning of the lease term falls within the last 25 percent of the total estimated economic life of the leased property, including earlier years of use, this criterion shall not be used for purposes of classifying the lease. A lessor shall compute the present value of the minimum lease payments using the interest rate implicit in the lease. A lessee shall compute the present value of the minimum lease payments using his incremental borrowing rate unless (i) it is practicable for him to learn the implicit rate computed by the lessor and (ii) the implicit rate computed by the lessor is less than the lessee’s incremental borrowing rate. If both of those conditions are met, the lessee shall use the implicit rate.
Example of the tennis courts that were donated (contributed capital/fixed asset)