March 2017 Article Archives

FASB changes presentation of defined benefit costs

Published on March 22, 2017

FASB issued an accounting standard that is designed to increase the transparency and usefulness of information about defined benefit costs for pension plans and other post-retirement benefit plans presented in employer financial statements.

The rules changes are described in Accounting Standards Update No. 2017-07Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.

Defined benefit pension cost and post-retirement benefit cost (net benefit cost) comprise several components under GAAP that reflect different aspects of an employer’s financial arrangements, as well as the cost of benefits provided to employees. GAAP requires those components to be aggregated for reporting in financial statements.

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The ROI of Revenue Automation in a Post-ASC 606 World

Published on March 22, 2017

The new revenue recognition standards issued jointly by the Financial Accounting Standards Board and the International Accounting Standards Board have been a long time in the making, and merging U.S. and international standards into a consolidated, principles-based rule has required a collaborative effort. With such a long and slow ratification process, it’s surprising to learn most companies are still assessing the impact, according to the results made available from this expansive survey by PwC and the Financial Executives Research Foundation late last year.

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FASB Clarifies Scope of Asset Derecognition Guidance

Published on March 22, 2017

FASB issued a standard that clarifies the scope of its asset derecognition guidance and adds accounting guidance for partial sales of nonfinancial assets.

The guidance is included in Accounting Standards Update No. 2017-05Other Income—Gains and Losses From the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets

The amendments differ from current GAAP primarily for the real estate industry but may also affect other industries such as power and utilities, alternative energy, life sciences, and shipping.

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Nonqualified Patronage Distributions Provide Alternative for Coops

Published on March 22, 2017

Cooperatives distribute member-based income to patrons in the form of patronage dividends. Historically, these took the form of qualified patronage dividends with a portion paid in cash and the rest paid in qualified equity credits. Subchapter T of the Internal Revenue Code has specific requirements for a distribution to be considered “qualified.” Once these requirements are met, the cooperative is allowed a tax deduction for the entire patronage distribution, and the patron typically includes the full distribution in taxable income.

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