In recent years, accounting rule makers have issued guidance that requires certain items on the balance sheet to be reported at “fair value.” Here are some answers to frequently asked questions about this standard of value and how it’s measured. What is fair value? Under U.S. Generally Accepted Accounting Principles (GAAP), fair value is [...]
Small businesses may start off using the cash-basis method of accounting. But many eventually convert to accrual-basis reporting to conform with U.S. Generally Accepted Accounting Principles (GAAP). Which method is right for you? Cash method Under the cash method, companies recognize revenue as customers pay invoices and expenses when they pay bills. As a [...]
Major events or transactions — such as a natural disaster, a cyberattack, a regulatory change or the loss of a large business contract — may happen after the reporting period ends but before financial statements are finalized. The decision of whether to report these so-called “subsequent events” is one of the gray areas in [...]
Business transactions with related parties — such as friends, relatives, parent companies, subsidiaries and affiliated entities — may sometimes happen at above- or below-market rates. This can be misleading to people who rely on your company’s financial statements, because undisclosed related-party transactions may skew the company’s true financial results. The hunt for related parties [...]
Recently, the news media has given a lot of attention to initial public offerings using special purpose acquisition companies (SPACs). But there’s another major transaction that’s gaining momentum amid the economic chaos caused by the COVID-19 pandemic: privatizations. Going private (also known as delisting) has many benefits, including: Reduced accounting, regulatory and governance costs, [...]
How to Account for Software Purchases
