If Auto Palace closes the Quick Stop Service Centers, it should not report them as a discontinued operation. This is because the ongoing Auto Motive Centers are expected to generate significant continuing cash flows from taking over the Quick Stops' automotive services and tire business.
However, if Auto Palace sells the Quick Stop Centers, it should report them as a discontinued operation. This is because there will be no continuing involvement in or cash flows from the Quick Stops' operations after the sale. Auto Palace will only receive passive royalty fees with no ability to be involved in the Quick Stops' operations.
Highlights on changes in Audit formalities under New Companies Act 2013Mitesh Katira
Fundamental Shifts in The Companies Act
Changes in Auditor’s Responsibility
Process flow for Appointment
Highlights of Appointment Process
Appended Engagement Letter
Key Points in Audit Report
Key Additions to Audit Report
Applicability of CARO, 2015
Changes in CARO, 2015
Tips for Implementation
The purpose of this research was to find out the auditor independence challenges faced by external
auditors in auditing accounts of large companies in Zimbabwe. Many stakeholders of large firms are
demanding credible, reliable and accurate audited financial statements and were suspecting that some external
auditors were biased and less independent to the day to day operations of the executive management to meet
corporate governance standards
NTPC introduced a travel card system to simplify the process of official travel claims. The NTPC Travel Card is used by executives for payment of lodging during official travel, training, with a pre-set spending limit. It aims to promote transparency in travel claims and eliminate false/inflated claims. There is a tie-up with SBI Cards as the service provider. The travel card transactions are reflected online for approval, simplifying the claims process and optimizing resources. It has facilitated hassle-free official travel while improving transparency and preventing fraudulent claims.
City Schemes was considering supplementing its 3,000 square foot showroom with an e-commerce strategy and focusing on a few key furniture brands. The research found that while consumers value being able to see and feel furniture in person, many use online stores to research items before shopping in-store. It is recommended that City Schemes provide an online experience allowing consumers to experiment with colors, materials, and dimensions digitally. The research also found that consumers prefer a variety of styles from a handful of trusted brands over many brands. Focusing key brands and specific room-specific items in the showroom could be more effective than a large variety of options. Incorporating these changes could help City Schemes appeal to consumers both online
M.N. Sashi Kumar is seeking a new position and has over 13 years of experience in nutrition retail. He has worked with leading chains in the UAE, holding roles such as sales, area management, purchasing, and training. Sashi Kumar is forwarding his CV to provide details on his career progression, qualifications, responsibilities, and achievements for easy understanding of his experience and suitability for the open position.
알아서 처리해주는 똑똑한 세무비서 자비스
- 세무비서 자비스는 스타트업을 위한 Simple & Beautiful 세무기장 서비스입니다. 스마트폰으로 영수증을 촬영하고, 시스템에서 직원을 등록하는 등 고객의 세무 관련 업무를 최소화하였습니다. 또한 스타트업 대표님에게 필요한 재무 정보를 한 눈에 파악할 수 있는 analytics 기능을 제공합니다.
1) The document discusses Fitts's law, which states that there is a tradeoff between speed and accuracy in tasks. Faster movements compromise accuracy, and more accurate movements sacrifice speed.
2) An experiment was conducted with students focusing on either maximum speed or accuracy when tracing a star on a mirror tracer. Results showed those emphasizing speed had more errors, while those focusing on accuracy took longer.
3) The experiment provided evidence for Fitts's law - a tradeoff between speed and accuracy. When trying for both speed and accuracy, students were fastest but least accurate. Balance is needed between the two for optimal performance.
Everyday blessings in everyday lessons "Untapped Potential"Ryan N. Mitchell
1) The author encountered a homeless man who asked for food. Instead of giving him money, the author had the man draw a picture in exchange for a meal so that he could feel a sense of accomplishment.
2) The man drew a picture of Malcolm X on a paper bag that impressed the author. He paid the man an additional $20 for the drawing, which he had framed.
3) The author reflects on how many people may have untapped talents but are waiting for others to help them, rather than using the skills they have to thrive. He encourages taking action to help unlock one's potential and help others do the same.
Highlights on changes in Audit formalities under New Companies Act 2013Mitesh Katira
Fundamental Shifts in The Companies Act
Changes in Auditor’s Responsibility
Process flow for Appointment
Highlights of Appointment Process
Appended Engagement Letter
Key Points in Audit Report
Key Additions to Audit Report
Applicability of CARO, 2015
Changes in CARO, 2015
Tips for Implementation
The purpose of this research was to find out the auditor independence challenges faced by external
auditors in auditing accounts of large companies in Zimbabwe. Many stakeholders of large firms are
demanding credible, reliable and accurate audited financial statements and were suspecting that some external
auditors were biased and less independent to the day to day operations of the executive management to meet
corporate governance standards
NTPC introduced a travel card system to simplify the process of official travel claims. The NTPC Travel Card is used by executives for payment of lodging during official travel, training, with a pre-set spending limit. It aims to promote transparency in travel claims and eliminate false/inflated claims. There is a tie-up with SBI Cards as the service provider. The travel card transactions are reflected online for approval, simplifying the claims process and optimizing resources. It has facilitated hassle-free official travel while improving transparency and preventing fraudulent claims.
City Schemes was considering supplementing its 3,000 square foot showroom with an e-commerce strategy and focusing on a few key furniture brands. The research found that while consumers value being able to see and feel furniture in person, many use online stores to research items before shopping in-store. It is recommended that City Schemes provide an online experience allowing consumers to experiment with colors, materials, and dimensions digitally. The research also found that consumers prefer a variety of styles from a handful of trusted brands over many brands. Focusing key brands and specific room-specific items in the showroom could be more effective than a large variety of options. Incorporating these changes could help City Schemes appeal to consumers both online
M.N. Sashi Kumar is seeking a new position and has over 13 years of experience in nutrition retail. He has worked with leading chains in the UAE, holding roles such as sales, area management, purchasing, and training. Sashi Kumar is forwarding his CV to provide details on his career progression, qualifications, responsibilities, and achievements for easy understanding of his experience and suitability for the open position.
알아서 처리해주는 똑똑한 세무비서 자비스
- 세무비서 자비스는 스타트업을 위한 Simple & Beautiful 세무기장 서비스입니다. 스마트폰으로 영수증을 촬영하고, 시스템에서 직원을 등록하는 등 고객의 세무 관련 업무를 최소화하였습니다. 또한 스타트업 대표님에게 필요한 재무 정보를 한 눈에 파악할 수 있는 analytics 기능을 제공합니다.
1) The document discusses Fitts's law, which states that there is a tradeoff between speed and accuracy in tasks. Faster movements compromise accuracy, and more accurate movements sacrifice speed.
2) An experiment was conducted with students focusing on either maximum speed or accuracy when tracing a star on a mirror tracer. Results showed those emphasizing speed had more errors, while those focusing on accuracy took longer.
3) The experiment provided evidence for Fitts's law - a tradeoff between speed and accuracy. When trying for both speed and accuracy, students were fastest but least accurate. Balance is needed between the two for optimal performance.
Everyday blessings in everyday lessons "Untapped Potential"Ryan N. Mitchell
1) The author encountered a homeless man who asked for food. Instead of giving him money, the author had the man draw a picture in exchange for a meal so that he could feel a sense of accomplishment.
2) The man drew a picture of Malcolm X on a paper bag that impressed the author. He paid the man an additional $20 for the drawing, which he had framed.
3) The author reflects on how many people may have untapped talents but are waiting for others to help them, rather than using the skills they have to thrive. He encourages taking action to help unlock one's potential and help others do the same.
The Financial Accounting Standards Board (FASB) is wrapping up some major projects. It released additional updates to revenue recognition and the long-awaited changes to financial instruments: credit losses in the second quarter of 2016. It also released exposure drafts on smaller scale projects. Activity with this Board is expected to continue, with eight exposure drafts and three final standards scheduled for the third quarter.
This white paper can help tax professionals understand the challenges of managing fixed assets involved in a technical termination and how to more efficiently and accurately handle the set-up, transfer, and management of those assets.
The document summarizes the key differences between AS 17 and the revised IFRS 8 regarding segment reporting. IFRS 8 takes a management approach to identifying operating segments based on how management views and makes decisions about the entity. It requires public entities to disclose selected segment information in both annual and interim financial reports. IFRS 8 also provides guidelines on identifying reportable segments and disclosure requirements for segment information.
DRAFT – For Discussion Purposes Only MemorandumTo Energy WorkDustiBuckner14
DRAFT – For Discussion Purposes Only
Memorandum
To: Energy Works, Inc. Accounting Files
From: Richard Smith, Accounting Policy team
Date: 12/1/20X1
Re: Accounting for proposed joint venture with Big Oil, Inc.
Sidebar: The type of transaction is described succinctly in the “Re” line
Facts
Energy Works, Inc. is a nonpublic oil and gas company that is forming a joint venture (JV) with Big Oil, Inc. for the extraction of proved oil reserves in the arctic. Both venturers wish to share in the risks and rewards of this venture, while benefiting from each other’s technical expertise and sharing of key assets. Energy Works will contribute a floating production storage and offloading facility (FPSO), valued at $100 million, along with $20 million in cash, to the venture in exchange for a 50% equity interest. Energy Works is not in the business of marketing its production facilities and equipment for sale; rather, it uses these facilities in its own oil and gas producing activities.
Big Oil will contribute its arctic drilling permit, also valued at $100 million, along with $20 million in cash, to the venture in exchange for a 50% equity interest. Assume that the cost basis of the contributed assets is the same as the fair values of these assets. Profits and losses of the venture will be shared based upon the equity interest held by each investor.
Operations of the joint venture will be overseen by its Board of Directors. Each venturer will receive 2 seats on the Board, for a total of 4 seats, and all significant decisions of the JV require the unanimous consent of the Board, with any disputes to be settled by an independent arbitrator (binding arbitration). The Board has appointed Energy Works to manage the day-to-day operations of the FPSO facility. Additionally, both venturers will provide employees and managerial personnel with technical expertise to perform day-to-day operations for the JV. Energy Works will not receive separate compensation for its role as manager. The joint venture will be legally organized as an LLC.
The following picture illustrates the relationships between the parties in this arrangement.
Energy Works must determine how to record its investment in the JV.
Issues
1. Is Energy Works required to consolidate the joint venture?
2. If consolidation is not required, what accounting method should Energy Works use to account for its investment in the JV?
3. How will Energy Works record the transfer of the FPSO facility to the JV?*
*This issue is not evaluated in full within this memo, however a discussion of key considerations is provided.
Sidebar: Notice that each issue is phrased in the form of a question.
Analysis – Issue 1: Is Energy Works required to consolidate the joint venture?
FASB Accounting Standards Codification (ASC) 810-10 (Consolidation) provides guidance for determining when consolidation of another entity is required. Two consolidation models are provided: the variable interest entity (VIE) model and the ...
The FASB is contemplating an exposure draft to propose an update to the accounting standard on statements of cash flows. The update aims to reduce diversity in practice regarding the classification of certain cash receipts and payments. Specifically, it would provide classification guidance for eight cash flow issues that currently have no guidance or unclear guidance. Adopting the update would standardize reporting and enhance comparability. The FASB is seeking stakeholder feedback on the proposed update before determining an effective date.
The EITF recently reached consensus on issues related to NAV disclosures and dropdown transactions for master limited partnerships. For NAV disclosures, instruments using the practical expedient will be exempt from fair value hierarchy classification and disclosure, but disclosed as a reconciling item. For dropdown transactions, the general partner must retroactively adjust historical earnings per unit to account for the transfer as if it occurred on the earliest date of common control. The EITF also reached consensus-for-exposure drafts on issues related to electricity contracts, prepaid stored-value cards, and employee benefit plan simplification.
Research MemorandumToCEO, CFO, and Controller of XYZ Research .docxdebishakespeare
Research Memorandum
To: CEO, CFO, and Controller of XYZ Research Company, Inc.
From: Nathan Ellery, Research Analyst
Date: August 22, 2013
RE: Accounting for Patents
Facts:
XYZ Research Company, incorporated in 2010, develops new technology for interplanetary exploration. The company holds many patents, and has historically expensed the costs associated with the patents.
Issues:
1. How are patents accounted for according to GAAP?
2. What is impairment testing, and does it apply to the patents held by XYZ Research Company?
3. Can a company capitalize their patents?
4. Are there any unique situations or exclusions for the industry (technology, or interplanetary exploration), in regards to accounting methods?
5. What corrective action, if any, is recommended to correct any misstatements made with regard to their patents?
Authorities on Accounting for Patents (Intangible Assets):
ASC 350-30-45-1 states that at a minimum, all intangible assets shall be aggregated and presented as a separate line item in the statement of financial position. However, that requirement does not preclude presentation of individual intangible assets or classes of intangible assets as separate line items.
ASC 350-30-45-2 states that the amortization expense and impairment losses for intangible assets shall be presented in income statement line items within continuing operations as deemed appropriate for each entity.
ASC 350-30-35-1 states that the accounting for a recognized intangible asset is based on its useful life to the reporting entity. An intangible asset with a finite useful life shall be amortized; an intangible asset with an indefinite useful life shall not be amortized.
ASC 350-30-35-2 states that the useful life of an intangible asset to an entity is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of that entity.
ASC 350-30-35-15 states that if an intangible asset is determined to have an indefinite useful life, it shall not be amortized until its useful life is determined to be no longer indefinite.
ASC 350-30-35-16 states that an entity shall evaluate the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events and circumstances continue to support an indefinite useful life.
ASC 350-30-35-17 states that if an intangible asset that is not being amortized is subsequently determined to have a finite useful life, the asset shall be tested for impairment in accordance with paragraphs 350-30-35-18 through 35-19. That intangible asset shall then be amortized prospectively over its estimated remaining useful life and accounted for in the same manner as other intangible assets that are subject to amortization.
ASC 350-30-35-18 states that an intangible asset that is not subject to amortization shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely t ...
This presentation would be helpful if you are seeking information regarding Statutory Bank Branch Audit under Banking Regulations Act, India.
This presentation was delivered by me at Institute of Chartered Accountants of India's program in our town during April 2014.
This document provides an overview and summary of updates from the Financial Accounting Standards Board (FASB) regarding accounting standards on topics such as goodwill impairment testing, presentation of comprehensive income, and fair value measurement to achieve convergence with International Financial Reporting Standards (IFRS). The updates aim to improve financial reporting consistency, comparability, and transparency. Key provisions modify goodwill impairment testing for reporting units with zero/negative carrying amounts and require entities to present comprehensive income in one continuous statement or two consecutive statements.
Special provisions of presumptive taxation under income tax act 1961MVSARMA1
The document discusses India's presumptive taxation scheme for small businesses and professionals under sections 44AD, 44ADA, and 44AE of the Income Tax Act of 1961. It provides relief for small taxpayers by allowing them to declare income at prescribed rates without needing to maintain extensive books of accounts or get accounts audited. Eligible assessees include individuals, HUFs, and partnerships with turnover below Rs. 2 crore, excluding brokers, commission agents, and those claiming other tax deductions. The schemes deem 8% of turnover as business income for most sectors and 6% if receipts are through specific bank instruments.
The document provides details about a full day program on tax audits presented by CA Kusai Goawala. It discusses the applicability of tax audits for individuals and businesses based on their gross receipts. It also summarizes key clauses in the tax audit report form 3CD, including those related to registration, partnership details, maintenance of books of accounts, presumptive taxation, depreciation, and certain deductions. The document aims to analyze important clauses and discuss relevant issues that may arise for tax auditors.
The document discusses several audit issues and cases:
1) It discusses the responsibilities of auditors according to ISA 240 and inherent risks in various accounts of a company called Ratty Ltd. This includes expenses, intangible assets, sales, inventory, and plant and equipment.
2) It analyzes audit reports that should be issued for three different companies - Crocodile.com should receive a qualified report, Peter and Wendy Ltd. can receive an unqualified report, and Homes For Dogs should receive an adverse report.
3) It explains the differences between an audit engagement letter provided at the start of an audit and a letter of representation provided at the end, with the latter certifying management responsibilities
HKEx Prolonged Suspension Status Report (30 Mar 2015)asianextractor
The document summarizes the status of companies that have been suspended from trading on the stock exchange for three months or more. It categorizes the long-suspended companies based on their outstanding issues and lists the major developments and outstanding resumption conditions for each company. Several companies are undergoing delisting procedures due to severe financial difficulties or minimal operations, while others are suspended due to irregularities, lack of financial reporting, or regulatory investigations. The exchange may continue suspensions or delist companies that do not adequately address issues.
This document provides guidance on accounting for depreciation in companies according to the Companies Act of India. It discusses the methods of charging depreciation allowed under the Act, the applicability of depreciation rates prescribed in Schedule XIV, adoption of different depreciation methods for different asset types, changing depreciation methods, and other related topics. The key points are:
1) Section 205 of the Companies Act prescribes the methods for charging depreciation, including straight line and written down value methods.
2) Schedule XIV provides minimum depreciation rates that must be used, but companies can use higher rates if justified.
3) Companies have flexibility to use different depreciation methods for different
Welcome to HWM Technologies CC RecIT OverviewAndre Aysen
RecIT! is a reconciliation tool designed for Sage ACCPAC accounting software. It automates the reconciliation process between general ledgers and associated sub-ledgers like accounts receivable, accounts payable, and inventory. This process is currently manual and time-consuming. RecIT! identifies discrepancies between ledger entries and provides reports on reconciled and unreconciled items to help users analyze problems. It reduces the time and costs associated with reconciliation and validation work.
This document provides an overview of segment reporting under SAP New GL. It defines an operating segment as a business component that earns revenue and incurs expenses. Segments are identified based on discrete financial information reviewed by a chief operating decision maker. Reportable segments meet certain thresholds for revenue, profits/losses, or assets. SAP New GL allows splitting of financial statements like P&L and balance sheet by segment. It also enables real-time reconciliation between financial and management accounting data.
GAAP Accounting Update: A Review of Recent Changes in GAAP - Derek DanielDecosimoCPAs
This document summarizes recent changes and proposed changes to GAAP standards. It discusses amendments to accounting for unrecognized tax benefits, the definition of a public business entity, accounting alternatives for private companies regarding goodwill impairment testing and amortization, and a simplified hedge accounting approach for certain interest rate swaps entered into by private companies. The overall intent is to reduce costs for private companies by simplifying some accounting and financial reporting requirements.
The Financial Accounting Standards Board (FASB) is wrapping up some major projects. It released additional updates to revenue recognition and the long-awaited changes to financial instruments: credit losses in the second quarter of 2016. It also released exposure drafts on smaller scale projects. Activity with this Board is expected to continue, with eight exposure drafts and three final standards scheduled for the third quarter.
This white paper can help tax professionals understand the challenges of managing fixed assets involved in a technical termination and how to more efficiently and accurately handle the set-up, transfer, and management of those assets.
The document summarizes the key differences between AS 17 and the revised IFRS 8 regarding segment reporting. IFRS 8 takes a management approach to identifying operating segments based on how management views and makes decisions about the entity. It requires public entities to disclose selected segment information in both annual and interim financial reports. IFRS 8 also provides guidelines on identifying reportable segments and disclosure requirements for segment information.
DRAFT – For Discussion Purposes Only MemorandumTo Energy WorkDustiBuckner14
DRAFT – For Discussion Purposes Only
Memorandum
To: Energy Works, Inc. Accounting Files
From: Richard Smith, Accounting Policy team
Date: 12/1/20X1
Re: Accounting for proposed joint venture with Big Oil, Inc.
Sidebar: The type of transaction is described succinctly in the “Re” line
Facts
Energy Works, Inc. is a nonpublic oil and gas company that is forming a joint venture (JV) with Big Oil, Inc. for the extraction of proved oil reserves in the arctic. Both venturers wish to share in the risks and rewards of this venture, while benefiting from each other’s technical expertise and sharing of key assets. Energy Works will contribute a floating production storage and offloading facility (FPSO), valued at $100 million, along with $20 million in cash, to the venture in exchange for a 50% equity interest. Energy Works is not in the business of marketing its production facilities and equipment for sale; rather, it uses these facilities in its own oil and gas producing activities.
Big Oil will contribute its arctic drilling permit, also valued at $100 million, along with $20 million in cash, to the venture in exchange for a 50% equity interest. Assume that the cost basis of the contributed assets is the same as the fair values of these assets. Profits and losses of the venture will be shared based upon the equity interest held by each investor.
Operations of the joint venture will be overseen by its Board of Directors. Each venturer will receive 2 seats on the Board, for a total of 4 seats, and all significant decisions of the JV require the unanimous consent of the Board, with any disputes to be settled by an independent arbitrator (binding arbitration). The Board has appointed Energy Works to manage the day-to-day operations of the FPSO facility. Additionally, both venturers will provide employees and managerial personnel with technical expertise to perform day-to-day operations for the JV. Energy Works will not receive separate compensation for its role as manager. The joint venture will be legally organized as an LLC.
The following picture illustrates the relationships between the parties in this arrangement.
Energy Works must determine how to record its investment in the JV.
Issues
1. Is Energy Works required to consolidate the joint venture?
2. If consolidation is not required, what accounting method should Energy Works use to account for its investment in the JV?
3. How will Energy Works record the transfer of the FPSO facility to the JV?*
*This issue is not evaluated in full within this memo, however a discussion of key considerations is provided.
Sidebar: Notice that each issue is phrased in the form of a question.
Analysis – Issue 1: Is Energy Works required to consolidate the joint venture?
FASB Accounting Standards Codification (ASC) 810-10 (Consolidation) provides guidance for determining when consolidation of another entity is required. Two consolidation models are provided: the variable interest entity (VIE) model and the ...
The FASB is contemplating an exposure draft to propose an update to the accounting standard on statements of cash flows. The update aims to reduce diversity in practice regarding the classification of certain cash receipts and payments. Specifically, it would provide classification guidance for eight cash flow issues that currently have no guidance or unclear guidance. Adopting the update would standardize reporting and enhance comparability. The FASB is seeking stakeholder feedback on the proposed update before determining an effective date.
The EITF recently reached consensus on issues related to NAV disclosures and dropdown transactions for master limited partnerships. For NAV disclosures, instruments using the practical expedient will be exempt from fair value hierarchy classification and disclosure, but disclosed as a reconciling item. For dropdown transactions, the general partner must retroactively adjust historical earnings per unit to account for the transfer as if it occurred on the earliest date of common control. The EITF also reached consensus-for-exposure drafts on issues related to electricity contracts, prepaid stored-value cards, and employee benefit plan simplification.
Research MemorandumToCEO, CFO, and Controller of XYZ Research .docxdebishakespeare
Research Memorandum
To: CEO, CFO, and Controller of XYZ Research Company, Inc.
From: Nathan Ellery, Research Analyst
Date: August 22, 2013
RE: Accounting for Patents
Facts:
XYZ Research Company, incorporated in 2010, develops new technology for interplanetary exploration. The company holds many patents, and has historically expensed the costs associated with the patents.
Issues:
1. How are patents accounted for according to GAAP?
2. What is impairment testing, and does it apply to the patents held by XYZ Research Company?
3. Can a company capitalize their patents?
4. Are there any unique situations or exclusions for the industry (technology, or interplanetary exploration), in regards to accounting methods?
5. What corrective action, if any, is recommended to correct any misstatements made with regard to their patents?
Authorities on Accounting for Patents (Intangible Assets):
ASC 350-30-45-1 states that at a minimum, all intangible assets shall be aggregated and presented as a separate line item in the statement of financial position. However, that requirement does not preclude presentation of individual intangible assets or classes of intangible assets as separate line items.
ASC 350-30-45-2 states that the amortization expense and impairment losses for intangible assets shall be presented in income statement line items within continuing operations as deemed appropriate for each entity.
ASC 350-30-35-1 states that the accounting for a recognized intangible asset is based on its useful life to the reporting entity. An intangible asset with a finite useful life shall be amortized; an intangible asset with an indefinite useful life shall not be amortized.
ASC 350-30-35-2 states that the useful life of an intangible asset to an entity is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of that entity.
ASC 350-30-35-15 states that if an intangible asset is determined to have an indefinite useful life, it shall not be amortized until its useful life is determined to be no longer indefinite.
ASC 350-30-35-16 states that an entity shall evaluate the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events and circumstances continue to support an indefinite useful life.
ASC 350-30-35-17 states that if an intangible asset that is not being amortized is subsequently determined to have a finite useful life, the asset shall be tested for impairment in accordance with paragraphs 350-30-35-18 through 35-19. That intangible asset shall then be amortized prospectively over its estimated remaining useful life and accounted for in the same manner as other intangible assets that are subject to amortization.
ASC 350-30-35-18 states that an intangible asset that is not subject to amortization shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely t ...
This presentation would be helpful if you are seeking information regarding Statutory Bank Branch Audit under Banking Regulations Act, India.
This presentation was delivered by me at Institute of Chartered Accountants of India's program in our town during April 2014.
This document provides an overview and summary of updates from the Financial Accounting Standards Board (FASB) regarding accounting standards on topics such as goodwill impairment testing, presentation of comprehensive income, and fair value measurement to achieve convergence with International Financial Reporting Standards (IFRS). The updates aim to improve financial reporting consistency, comparability, and transparency. Key provisions modify goodwill impairment testing for reporting units with zero/negative carrying amounts and require entities to present comprehensive income in one continuous statement or two consecutive statements.
Special provisions of presumptive taxation under income tax act 1961MVSARMA1
The document discusses India's presumptive taxation scheme for small businesses and professionals under sections 44AD, 44ADA, and 44AE of the Income Tax Act of 1961. It provides relief for small taxpayers by allowing them to declare income at prescribed rates without needing to maintain extensive books of accounts or get accounts audited. Eligible assessees include individuals, HUFs, and partnerships with turnover below Rs. 2 crore, excluding brokers, commission agents, and those claiming other tax deductions. The schemes deem 8% of turnover as business income for most sectors and 6% if receipts are through specific bank instruments.
The document provides details about a full day program on tax audits presented by CA Kusai Goawala. It discusses the applicability of tax audits for individuals and businesses based on their gross receipts. It also summarizes key clauses in the tax audit report form 3CD, including those related to registration, partnership details, maintenance of books of accounts, presumptive taxation, depreciation, and certain deductions. The document aims to analyze important clauses and discuss relevant issues that may arise for tax auditors.
The document discusses several audit issues and cases:
1) It discusses the responsibilities of auditors according to ISA 240 and inherent risks in various accounts of a company called Ratty Ltd. This includes expenses, intangible assets, sales, inventory, and plant and equipment.
2) It analyzes audit reports that should be issued for three different companies - Crocodile.com should receive a qualified report, Peter and Wendy Ltd. can receive an unqualified report, and Homes For Dogs should receive an adverse report.
3) It explains the differences between an audit engagement letter provided at the start of an audit and a letter of representation provided at the end, with the latter certifying management responsibilities
HKEx Prolonged Suspension Status Report (30 Mar 2015)asianextractor
The document summarizes the status of companies that have been suspended from trading on the stock exchange for three months or more. It categorizes the long-suspended companies based on their outstanding issues and lists the major developments and outstanding resumption conditions for each company. Several companies are undergoing delisting procedures due to severe financial difficulties or minimal operations, while others are suspended due to irregularities, lack of financial reporting, or regulatory investigations. The exchange may continue suspensions or delist companies that do not adequately address issues.
This document provides guidance on accounting for depreciation in companies according to the Companies Act of India. It discusses the methods of charging depreciation allowed under the Act, the applicability of depreciation rates prescribed in Schedule XIV, adoption of different depreciation methods for different asset types, changing depreciation methods, and other related topics. The key points are:
1) Section 205 of the Companies Act prescribes the methods for charging depreciation, including straight line and written down value methods.
2) Schedule XIV provides minimum depreciation rates that must be used, but companies can use higher rates if justified.
3) Companies have flexibility to use different depreciation methods for different
Welcome to HWM Technologies CC RecIT OverviewAndre Aysen
RecIT! is a reconciliation tool designed for Sage ACCPAC accounting software. It automates the reconciliation process between general ledgers and associated sub-ledgers like accounts receivable, accounts payable, and inventory. This process is currently manual and time-consuming. RecIT! identifies discrepancies between ledger entries and provides reports on reconciled and unreconciled items to help users analyze problems. It reduces the time and costs associated with reconciliation and validation work.
This document provides an overview of segment reporting under SAP New GL. It defines an operating segment as a business component that earns revenue and incurs expenses. Segments are identified based on discrete financial information reviewed by a chief operating decision maker. Reportable segments meet certain thresholds for revenue, profits/losses, or assets. SAP New GL allows splitting of financial statements like P&L and balance sheet by segment. It also enables real-time reconciliation between financial and management accounting data.
GAAP Accounting Update: A Review of Recent Changes in GAAP - Derek DanielDecosimoCPAs
This document summarizes recent changes and proposed changes to GAAP standards. It discusses amendments to accounting for unrecognized tax benefits, the definition of a public business entity, accounting alternatives for private companies regarding goodwill impairment testing and amortization, and a simplified hedge accounting approach for certain interest rate swaps entered into by private companies. The overall intent is to reduce costs for private companies by simplifying some accounting and financial reporting requirements.
Amendments in Accounting Standards - March 31,2016
Macc final 2
1. 1
MEMORANDUM
To: Dr. Sue Gill, Dr. Beau Barnes, Dr. Richard Toolson
From: Joseph Lo
Date: February 4, 2014
Subject: Master of Accounting Final-Auto Palace Discontinued Operations
Relevant Facts: Auto Palace Inc., a calendar year-end SEC registrant, is a leading automotive
retail and service chain which operates exclusively in the automotive aftermarket industry. The
company has two operating units: Auto Motive Retail Centers, which sells parts and
accessories, and Quick Stop Service & Tire Centers, which performs maintenance, repairs, parts
installation, and tire sales.
Due to the poor performance of the Quick Stops segment, the company has reevaluated this
segment. The accelerating deterioration in the financial performance of these stores has
convinced the CEO that it is in the best interest of Auto Palace and its shareholders to cease
these operations. Auto Palace is currently deciding between two alternatives for the Quick
Stops stores: closing the stores and consolidating their activities into the Auto Motive facilities
or selling the Quick Stops. Regardless of which option is undertaken, the transaction will be
completed by June 30, 2013.
If Auto Palace chooses to close the Quick Stop Service Centers (Quick Stops), the 30 facilities
will be closed on or before June 30, 2013 (by the end of the second quarter of 2013). It is then
expected that the Auto Motive Centers will be ready to take over services currently handled by
the Quick Stops. Closing the stores is expected to generate significant cash flow in 2013 and to
increase free cash flow in 2013 and beyond. In addition, these actions are expected to yield
improvements in operating earnings of approximately $58 million in 2013 and $67 million
thereafter.
Auto Palace is also considering selling its Quick Stop Centers. The company is currently in
negotiations with a private equity company. The terms of which states that Auto Palace will
receive approximately $140 million in cash from the sale plus royalty fees equal to 12 percent
of future Quick Stop Center revenues for a period of six years. The terms of the royalty
agreement do not provide Auto Palace with the ability to be involved in the operations of the
Quick Stops.
Special Issues: First, determine whether or not the Quick Stops, if closed, should be reported as
a discontinued operation in Auto Palace's second quarter financial statements. Second,
determine whether Quick Stop Centers, if sold, should be reported as a discontinued operation
2. 2
in Auto Palace's second quarter financial statements. Discuss the financial statement impact of
reporting the Quick Stop Centers as discontinued operations and management’s likely
preference as to whether or not they would be in favor of reporting the operations as
discontinued operations or not.
Conclusion: The Quick Stop Center segment should not be reported as a discontinued operation
in Auto Palace's second quarter financial statements if it is closed. This is due to the fact that
the operations and cash flows of the component have not been eliminated from the ongoing
operations of the parent entity.
On the contrary, if the Quick Stop segment is to be sold, it should be reported as a discontinued
operation in Auto Palace's second quarter financial statements. This is because the operations
and cash flows of the Quick Stops component have been eliminated and Auto Palace will not
have any significant continuing involvement in the component's operations.
Support: The Quick Stop Centers can be classified as a component of an entity, which was
determined by Auto Palace. FASB ASC 205-20-20 defines "component of an entity" saying: "A
component of an entity comprises operations and cash flows that can be clearly distinguished,
operationally and for financial reporting purposes, from the rest of the entity. A component of
an entity may be a reportable segment or an operating segment, a reporting unit, a subsidiary,
or an asset group ." Included in the facts of the case, it is stated that: "For financial reporting
purposes, Auto Palace has two operating and reportable segments in accordance with FASB ASC
280, Segment Reporting." Since much of the GAAP relevant to this case uses the phrase
"component of an entity", it is important to understand that both Auto Motive Centers and
Quick Stops Centers are in fact components of Auto Palace. This is important in order to
continue the discussion of whether or not the closing or selling of Quick Stops can be reported
as a discontinued operation.
There are two major sources of regulations from GAAP that will be used in this discussion. The
first is FASB ASC 205-20-45-1, which states: "the results of operations of a component of an
entity that either has been disposed of or is classified as held for sale under the requirements of
paragraph 360-10-45-9, shall be reported in discontinued operations in accordance with
paragraph 205-20-45-3 if both of the following conditions are met:
(a)" The operations and cash flows of the component have been (or will be) eliminated from the
ongoing operations of the entity as a result of the disposal transaction."
(b) "The entity will not have any significant continuing involvement in the operations of the
component after the disposal transaction."
3. 3
The second regulation is FASB ASC 205-20-55-3, which is a four step process which may be used
to evaluate the two conditions of paragraph 205-20-45-1:
Step one: "Are continuing cash flows expected to be generated by the ongoing entity?"
Step two: "Do the continuing cash flows result from a migration or continuation of activities?"
Step three: "Are the continuing cash flows significant?"
Step four: "Does the ongoing entity have significant continuing involvement in the operations of
the disposed component?"
If the answer to any of steps one, two, or three are "no", then step four must be evaluated. If
the requirement in step four is met, classification as a discontinued operation is allowed. If not,
then it is not. If steps one through three are all met, then the operation in question should not
be reported as a discontinued operation. These steps are depicted in a flow chart that is shown
in Exhibit 1 below.
Closing the Quick Stop Centers:
To recap, the facts of the case state: "If Auto Palace chooses to close the Quick Stop Centers, all
of the thirty facilities will be closed by June 30, 2013, and it is expected that the Auto Motive
Centers will be fully prepared to take over all of the automotive service and tire business
currently handled by the Quick Stops."
In order to determine if part (a) of 205-20-45-1 is met, "whether the operations and cash flows
of the component have been eliminated", 205-20-55-3 needs to be examined. The first step
asks: "are continuing cash flows expected to be generated by the ongoing entity?" The answer
to this question can be found in the facts of the case, which states that: " After the closure of
the centers, Auto Palace estimates that there will be continuing cash flows from the sale of
automotive services and tires by the ongoing Auto Motive Centers of approximately $600
million." In this case the ongoing entity is Auto Palace which has Auto Motive Center as an
operating segment. Therefore it can be said that step one of 205-20-55-3 has been met with a
"yes".
FASB ASC 205-20-55-4 states: "the evaluation of whether the operations and cash flows of a
disposed component have been or will be eliminated from the ongoing operations of the entity
depends on whether continuing cash flows have been or are expected to be generated and, if
so, whether those continuing cash flows are direct or indirect." Since it was shown in step one
of 205-20-55-3 that continuing cash flows are expected to be generated, FASB ASC 205-20-55-7
can be used. It states that: "The revenue-producing activities (cash inflows) of the component
4. 4
have been continued and therefore are considered direct cash flows if either of the following
two conditions is met:
(a) "Significant cash inflows are expected to be recognized by the ongoing entity as a result of a
migration of revenues from the disposed component after the disposal transaction."
(b)" Significant cash inflows are expected to be received by the ongoing entity as a result of
the continuation of activities between the ongoing entity and the disposed component after
the disposal transaction."
This particular section brings the discussion into step two which presents the question of
whether the continuing cash flows result from a migration or continuation of activities.
205-20-55-7a asks whether the cash flows to be recognized by the ongoing entity, Auto Palace,
are a result of a migration of revenues from the disposed component. The regulation further
states in an example: "There is a presumption that if the ongoing entity continues to sell a
similar commodity on an active market after the disposal transaction, the revenues or costs
would be considered a migration. " The facts from the case states: "because the Auto Motive
Centers will be fully prepared to take over all of the automotive service and tire business
currently handled by the Quick Stops, Auto Palace anticipates minimal loss of existing
customers." This means that the Auto Motive Centers will more than likely continue to sell a
similar commodity, tires and automotive services, on the open market to existing customers.
Therefore it can be concluded that a migration of activities and revenues has occurred, which
means that step two of 205-20-55-3 has been met. Since 205-20-55-7 only requires that one of
the two requirements is met for there to be direct cash flows, part (b) can be skipped.
Next, step three needs to be addressed, which asks: "are the continuing cash flows significant?"
FASB ASC 205-20-55-14 can be used to determine this, which states: "If expected continuing
cash inflows or outflows are the result of a migration of revenues or costs to the ongoing entity
or a continuation of activities between the disposed component and the ongoing entity, the
ongoing entity should consider whether the continuing cash flows will be significant." It was
previously shown that the continuing cash flows are a result of a migration of revenues to the
ongoing entity. 205-20-55-14 further explains how to evaluate significance by stating: "The
evaluation as to whether continuing cash flows would be significant is a matter of judgment
and should be based on a comparison between the expected continuing cash flows to be
generated by the ongoing entity after the disposal transaction and the cash flows that would
have been expected to be generated by the disposed component absent the disposal
transaction." The facts from the case can be used in order to make this comparison: "Auto
Palace estimates that the Quick Stops would have generated approximately $700 million of
sales absent the disposal transaction." Coupled with the information that continuing cash flows
5. 5
for the ongoing entity will be approximately $600 million, it can be calculated that
approximately 85.7 percent (exhibit 2, pg 9) of Quick Stops revenues will be continued by Auto
Motive. In addition, the $600 million revenue stream can be considered significant when
compared next to the net sales of Quick Stops for 2011 ($701 million) and 2012 ($689 million).
This implies that even if Quick Stops had stayed as a reporting segment, the revenue streams
going to Auto Palace would have been approximately the same. Therefore it can be safely said
that the continuing cash flows are significant given the numerical figures and GAAP examined.
The first three steps of 205-20-55-3 have been met: continuing cash flows are expected to be
generated by the ongoing entity, the continuing cash flows result from a migration of activities,
and the continuing cash flows are significant. Looking at the chart in Exhibit 1, pg 9,
classification of the operating segment as a discontinued operation is not appropriate.
Selling the Quick Stop Centers:
To recap, the facts of the case state that Auto Palace is: "currently in negotiations with a buyer
for the Quick Stop Centers and the majority of the sales terms have been agreed upon. The
agreement provides that Auto Palace would receive approximately $140 million in cash from
the sale plus royalty fees equal to 12 percent of future Quick Stop Center revenues for a period
of six years."
The same GAAP regulations can be used for this scenario. The first regulation was FASB ASC
205-20-45-1 and its two conditions:
(a) the operations and cash flows have been eliminated
(b) the entity will not have any significant involvement in the operations of the component
after the disposal transaction.
This regulation will also be supplemented with FASB ASC 205-20-55-3 and its four step process
that looks at:
1) continuing cash flows
2) migration or continuation of activities
3) significance of cash flows
4) continuing involvement.
Using a similar thought process used to evaluate the previous scenario, the four step process of
205-20-55-3 can be examined. Step one asks whether continuing cash flows are expected to be
generated by the ongoing entity. The facts of the case state: "from the sale, Auto Palace will
6. 6
receive "royalty fees" equal to 12 percent of future Quick Stop Center revenues for a period of
six years." Thus, Auto Palace will receive continuing cash flows from the disposed Quick Stop
Centers.
Now that it has been determined that continuing cash flows will be generated by the ongoing
entity, it must be determined if those cash flows will be direct or indirect. This can be done by
examining FASB ASC 205-20-55-7, which will lead to an answer for step two. To recap, 205-20-
55-7 states: "the revenue-producing activities of the component have been continued and
therefore are considered direct cash flows if significant cash flows are to be received by the
ongoing entity as a result of: (a) migration of revenues or (b) continuation of activities."
Included in part (a) is guidance which says: "there is a presumption that if the ongoing entity
continues to sell a similar commodity on an active market after the disposal transaction, the
revenues or costs would be considered a migration." There is no migration of revenues or costs
in this case because, by selling the Quick Stop Centers segment, Auto Palace is no longer in the
business of selling the automotive and tire services. There is no information from the facts of
the case indicating that Auto Palace is keeping any part of those operations after the disposal.
For part (b), there will be no continuation of activities between Auto Palace and the Quick Stop
Centers segment after the latter is sold. Included in part (b) of 205-20-55-7 is an example that
says: "the ongoing entity sold products or services to or purchased products or services from
the disposed component before its disposal (recognized as intra-entity sales or cost of sales)
and it continues to sell similar products or services to or purchase similar products or services
from the disposed component or a related party after the disposal. " Auto Palace did not sell
products or services to the Quick Stop Centers prior to the disposal and will not sell similar
products or services afterward. In addition, FASB ASC 205-20-55-13 provides examples of
continuing cash flows that would likely not be direct, and part (d) provides guidance that is
relevant to this analysis: "passive royalty interests in the disposed component's operations."
Therefore since neither of the two requirements in 205-20-55-7 has been met, along with
guidance provided in 205-20-55-13, the revenue producing cash flows of the component cannot
be considered as direct cash flows. The answer to step two is "no".
Next, step three asks whether the continuing cash flows are significant. Once again, FASB ASC
205-20-55-14 can be used. 205-20-55-14 states: "If expected continuing cash inflows or
outflows are the result of a migration of revenues or costs to the ongoing entity or a
continuation of activities between the disposed component and the ongoing entity, the
ongoing entity should consider whether the continuing cash flows will be significant." Since it
was previously shown that there will not be a migration of revenues or a continuation of
activities, there is no need to consider whether the continuing cash flows will be significant.
7. 7
Step four asks whether the ongoing entity will have any significant continuing involvement in
the operations of the disposed component. The answer is "no". Per the case facts: "The terms
of the royalty agreement do not provide Auto Palace with the ability to be involved in the
operations of Quick Stop Centers." This means that the continuing involvement that Auto
Palace will have with the Quick Stop Centers cannot be considered to be significant continued
involvement.
Therefore using the diagram in exhibit 1 pg 9, the answer to whether the Quick Stop Centers
can be reported as a discontinued operation can be determined. Since step two was answered
with a "no", the last question can be looked at: "whether or not there is significant continuing
involvement by the ongoing entity." Since the answer to that is also "no", as previously proven,
classification of the disposed component as a discontinued operation is appropriate.
Management's Motivation: Having a discontinued operations for a company means that it can
report separately the disposed component from the core business operations. This allows the
company to report separately the gains or losses that come from the disposal of the component
as described in FASB ASC 205-20-45-3. It states that: "in the period in which a component of an
entity either has been disposed of or is classified as held for sale, the income statement of a
business entity for current and prior periods shall report the results of operations of the
component, including any gain or loss recognized in discontinued operations." The diagram in
exhibit 3, pg 10 below further explains.
For the scenario in which Auto Palace closes the Quick Stop Centers, the facts of the case state:
"closing the stores...is expected to yield improvements in operating earnings of approximately
$58 million in 2013 and approximately $67 million thereafter." This means by disposing the
Quick Stop Centers, the overall earnings for the company will not be dragged down by the poor
performance of the Quick Stop Centers. In addition, the disposal shows investors that the
company is willing to eliminate parts of the business that are not performing well in order to
provide sustained growth and performance for the future.
For the scenario in which Auto Palace sells the Quick Stop Centers, the company will be able to
provide a separate line under discontinued operations in the income statement for it. The
company will then be able to record the losses fromthe disposed component of $172 million in
2011 and $88 million in 2012 under discontinued operations. This allows the investors to clearly
see the distinction between the profitable and non-profitable components of the business and
understand why the company as a whole was not performing as well as it should have been in
previous years. In addition, total operating earnings will be higher than it was in 2011 ($107
million ) and 2012 ($120 million) with the removal of the losses from Quick Stops. Income from
continuing operations will be higher as a result, which will make the financials look better and
show a better financial outlook to outside investors and stakeholders.
8. 8
There are two sources from GAAP that further dictate how the reporting of a discontinued
operation that has been sold should be done. The first is FASB ASC 205-20-50-1, which states:
"The following shall be disclosed in the notes to financial statements that cover the period in
which a long-lived asset (disposal group) either has been sold or is classified as held for sale:
(a) "A description of the facts and circumstances leading to the expected disposal."
(b) "The gain or loss recognized."
(c) "If applicable, amounts of revenue and pretax profit or loss reported in discontinued
operations."
(d) "If applicable, the segment in which the long-lived asset (disposal group) is reported under
Topic 280."
Since it was previously shown that the sale of the Quick Stop Centers will continue to provide
continuing cash flows to Auto Palace, FASB ASC 205-20-50-4 needs to be examined. It states:
"The following information shall be disclosed in the notes to financial statements for each
discontinued operation that generates continuing cash flows:
(a) "The nature of the activities that give rise to continuing cash flows."
(b) "The period of time continuing cash flows are expected to be generated."
(c) "The principal factors used to conclude that the expected continuing cash flows are not
direct cash flows of the disposed component."
Auto Palace must disclose what exactly the disposed segment is and the monetary values that
arise from the sale.
Action(s) to be Taken: : Inform Auto Palace, Inc.'s management that, according to GAAP, if
they decide to close the Quick Stop operating segment, it will not be able to report it as a
discontinued operation. If they decide to sell the segment, it will be reportable as a
discontinued operation.
11. 11
March 1, 2014
John Doe, CEO
Auto Palace, Inc.
425 NE Campus St.
Pullman, WA 99163
Dear Mr. Doe,
It was a pleasure seeing you at the FASB function last month! It seemed like you had a great
time, with all that pressure off of your shoulders after your big acquisition of XYZ!
If you recall from a couple months back you asked me to help your company determine the
appropriate financial reporting of your Quick Stops business under a couple of alternatives you
were considering. You wanted to see what you had to do regarding Generally Accepted
Accounting Principles (GAAP) if you ended up deciding to sell or shut down Quick Stops. The
topic in question here is discontinued operations and whether or not that distinction can be
made regarding your decision to close or sell the business in question.
What my team and I found is if Auto Palace, Inc. ends up deciding to close Quick Stops, it will
not be able to report it as a discontinued operation. The regulation required that the money
flows and operations of that business are completely eliminated. As we delved deeper into the
Quick Stop business, we found out that its activities, namely the automobile service and tire
repairs, will be shifted to the Auto Motive Centers. That means that Auto Palace, Inc. will
continue to receive cash flows directly from Quick Stops via the Auto Motive Centers. As a
result, it was concluded that the money flows from Quick Stops have not eliminated according
to GAAP standards, they are just being shifted to Auto Motive. Your company estimated that
revenue from the automotive and tire services by Auto Motive will be approximately $600
million. If the Quick Stop Centers were not closed, its revenues would be approximately $700
million. As a result, the business that was formally called the Quick Stop Centers is not being
eliminated, it is merely being combined into the Auto Motive business, with revenues shifting
over.
Conversely, if your company ends up deciding to sell Quick Stops, you will be able to report it as
being eliminated from your overall business. We have concluded that the revenues and money
flows from the Quick Stop Centers to Auto Palace will be eliminated. Even though your
company will receive royalty fees, they will not constitute money flows that are part of your
company's core business. In addition, your company will not have any significant involvement in
the Quick Stop Centers after the sale because of the agreement that was made between Auto
Palace and Giant Private Equity Company. As a result of our analysis, we have concluded that by
selling the Quick Stop Centers, your company will be able to report that it as a discontinued
operation, meaning that it has been eliminated from your business.
12. 12
This is a good result for your company with regard to what the financial statements will look
like. The losses that came about from the Quick Stop Centers will no longer be a part of your
core business. Investors will see that your company took the proactive approach in preventing
any future losses that will surely occur in an underperforming business segment.
I hope our analysis and conclusion has made a complicated topic easier to comprehend. Please
contact my office if you have any questions regarding how to proceed or if you would like to
discuss our engagement further.
Best,
Joseph Lo
Audit Manager
XYZ Firm, LLC.