Pittsburgh, USA

Accounting for contract assets and liabilities in a US business combination

By Jeffrey A. Ford, Grossman Yanak & Ford LLP

Prior guidance dating to the early 2000s typically treated acquired deferred revenue liabilities as legal obligations in a business combination. This, and varying practices related to subsequent revenue recognition on revenue contracts, was seen as inconsistent with Topic 606, Revenue from Contracts with Customers. In response, the Financial Accounting Standards Board (FASB) issued ASU 2021-08 to achieve clarity, consistency of practice and conformity with Topic 606.

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Moscow, Russia

Currency control restrictions and advance payments

By Valeria Khmelevskaya, KBK Accounting

The Russian legislation for currency regulation and control provides for so- called “repatriation” liability, i.e. obligation for Russian companies to secure the receipt of currency earnings from non-residents to the Russian bank accounts in certain cases. While originally the vast majority of foreign trade contracts fell within the scope of the “repatriation”, it has since been largely cancelled for Russian exporters. However, obligations to return advance payments made by Russian companies for goods that have not been ultimately delivered / imported, for services and works that have not been provided or completed are still applicable.

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Pittsburgh, USA

Equity-based compensation for private companies

By Jeffrey A. Ford, Grossman Yanak & Ford LLP

ASC Topic 718, Compensation-Stock Compensation directs accounting for share- based compensation awards such as share- option awards, which are classified as either liabilities or equity. Equity-classified awards are initially measured at fair value at the grant date, and are not subsequently remeasured unless they are modified and meet certain requirements. Liability-classified awards are remeasured at the end of each reporting period. If an observable market price is not available for a share- based award, the fair value of the awards is estimated using valuation techniques.

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Trends and developments for accounting firms

By Andrea van der Giezen, JAN© Auditors & Business Consultants B.V.

Four major changes for accounting firms were identified in a survey recently conducted in The Netherlands. In this article I would like to review these trends, as it is very likely that these are also applicable to GGI members in other countries.

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Turin, Italy

Integrated thinking and reporting in Italy in relation to the ESG world

By Paolo Motto, Three & Partners

Over the years organisations that benefit from the use of integrated reporting have had a key means of improving corporate communication. According to the International Integrated Reporting Council (IIRC), integrated reporting helps SMEs to better understand and communicate how they create value. This framework identifies six corporate capitals, including financial productive, intellectual, human, social and relational, as well as natural capital. When properly cultivated, these can add value over time.

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inventory

LIFO: back in style for US companies

By Jeffrey A. Ford, Grossman Yanak & Ford LLP

With the return of inflation at levels not seen for decades, the LIFO (last-in, first-out) method of inventory costing may be a valuable tax-saving opportunity. LIFO is not permitted by IFRS, but it is still acceptable in the US.

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London, UK

Classifying contingent payments in an acquisition: Contingent consideration or post-acquisition compensation?

By Hari Patel, Theta Global Advisors

Purchase accounting for acquisitions remains an area of complexity and judgement within IFRS, and the accounting implications on amounts paid or payable to sellers are commonly overlooked during commercial negotiations, particularly in relation to contingent payments. The critical step is to determine the correct classification of contingent payments between “contingent consideration” and “post-acquisition compensation” as this leads to different accounting and P&L outcomes.

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Pittsburgh, USA

Effects of reference rate reform on financial reporting

By Jeffrey A. Ford, Grossman Yanak & Ford LLP

Global market participants are transitioning from using or referencing the LIBOR and similar interbank offered rates to alternative reference rates. In response, in the United States, the FASB issued ASUs 2020-04 and 2021-01 to provide optional expedients and exceptions for affected contract modifications, hedge accounting, and held-to-maturity (HTM) debt securities. A high-level summary of the optional expedients follows.

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