Are You Biased?

As auditors, we’ve been taught over and over again to maintain professional skepticism when performing our audits. But as the landscape of companies change, so does our audit approach. With the increased use of technology and longevity of our client base, we need ensure our eyes are open and we ask the right questions. Bias …

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Accounting Standards Update: Accounting for Identifiable Intangible Assets in a Business Combination

In recent Henry & Horne blog posts, we have discussed the implementation of new Financial Accounting Standards Board (FASB) Accounting Standards Updates due to The Private Company Council’s (PCC) diligent work in finding alternatives within U.S. Generally Accepted Accounting Principles warranted for private companies. In December 2014, the FASB formally issued Accounting Standards Update (ASU …

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Inventory Reserves

If you are a company that carries inventory, you should most likely have an inventory reserve accounting policy in place. Creating an inventory reserve is a proactive and conservative accounting approach that companies use to prepare for events such as spoilage, theft, obsolescence, and other adverse situations on their inventories. An inventory reserve is a …

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Accounting Standards Update: Going Concern Disclosures

Traditionally under GAAP, financial statements are prepared using the going concern basis of accounting. This basis of accounting operates under the presumption that the reporting organization will continue to operate as a going concern (except in limited circumstances). Ultimately, this basis of accounting is critical to financial reporting because it establishes the fundamental basis for …

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Simplified Accounting for Goodwill for Private Companies

As many people know, in 2012, the Private Company Council (“PCC”) was formed to assist in creating alternatives in accounting for private companies. In November 2013, the Financial Accounting Standards Board (“FASB’) endorsed the proposal regarding an alternative approach for private companies for accounting for goodwill after a business combination. This accounting alternative was issued …

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Developing a Chart of Accounts

Often, I receive a request from new businesses for a sample chart of accounts.  While each chart of accounts is customized to that business, there are a few best practices that I communicate to my clients. When creating a new chart of accounts, you want to keep it simple and easy to use but also …

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How to Implement “Step 0” of the New Goodwill Impairment Testing Standards

The Financial Accounting Standards Board (FASB) issued new guidance that is aimed to make goodwill impairment testing easier for companies, and this guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. How will the new standard impact my company?  The new standard modifies the previous …

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Straight-line expense recognition of leases

Update: The guidance below will be superseded upon the new lease accounting standard becoming effective for most private companies in 2020. For further information on the upcoming changes to lease accounting, click here. Sometimes operating leases aren’t as straightforward as they seem to be and there are a couple of situations that create a deferred …

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Big GAAP vs. Little GAAP – The Proposed Verdict is In!

As a follow up to the September 20th posting “Big GAAP vs. Little GAAP – Where are we at?” the Financing Accounting Foundation’s (FAF) Board of Trustees released its proposed plan last week to address constituents concerns over the standard-setting process for private companies.  The proposed plan calls for the establishment of a “Private Company …

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