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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Fixed Asset Tracking: Why Software is Important

It may seem relatively simple at first to track your assets using an Excel spreadsheet and a couple of formulas to calculate depreciation. How could this create issues down the road? As your business grows, and more assets are acquired, the accuracy of your asset valuation could be steadily decreasing. There are multiple vulnerabilities associated …

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Changes to Requirements for Reporting Discontinued Operations

In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08 Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity that changed the requirements for reporting discontinued operations. Under the new standards, a disposal of …

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Being Aware of Your Debt Covenants

When companies are approved for a bank loan or line of credit, the loan agreement often contains certain affirmative and negative debt covenants. Debt covenants are conditions that the borrower must comply with in order to adhere to the terms of the loan agreement. Essentially, debt covenants bind a business to specific types of behavior …

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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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Segregation of Duties: Cash

One very important area to focus your efforts on maintaining segregation of duties is within the cash cycle. See below for important areas you may wish to make sure you have adequate segregation of duties within. In regards to processing cash receipts, one should be sure there is adequate segregation of duties among those who: …

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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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