Special Purpose Frameworks Flashcards
OCBOA – Special Purpose
Other Comprehensive Basis of Accounting - Not GAAP!!
Cash Basis
Cash in/Cash out
Cash = Equity
Cash is appropriate for Small, closely held businesses and Sole P
Modified Cash
Combination of cash and accrual basis
Modifications have been supported by GAAP
e.g. Inventory, PP&E - amort/dep, Income taxes, payables, receivables, interest bearing payables
Income Tax Basis
Very Common
Taxable Amount = Revenue
Deductible Amount = Expense
Certain non-taxable and non-deductible items included as revenues and expenses
e.g. municipal interest, life insurance premiums on officers, fines, life insurance proceeds from the death of an officer
Other Regulatory Basis
Structured to comply with a regulatory requirement
most common e.g. - state insurance reg agency
also public utility reg agency
Purpose of Personal F/S
for individuals/married couples/families
Used in conjunction with personal borrowing, personal financial planning, contract requirements, legal requirements
Personal F/S
Statement of Financial Position - always req
Changes in net worth is common not required
I/S and Cash Flows NEVER
Prepared using accrual and fair value
Personal Statemet of Net Worth
Shows causes and amounts of changes in net worth computed as:
Beginning NW
+/- Changes in Asset Values
+/- Changes in Liability Values
Personal Balance sheet
separate business investments should be shown as separate line items
other business interests that are not separate should be shown as separate assets and liabilities
measured at FV, but hierarchy disclosure is not required
Personal Balance sheet
separate business investments should be shown as separate line items
other business interests that are not separate should be shown as separate assets and liabilities
measured at FV, but hierarchy disclosure is not required
Private Company Council (PCC)
Alternative GAAP for private companies “little GAAP”
Developed with FASB, so actually is GAAP
trade off is relevance of info vs cost-benefit
Public Company
An entity required to furnish f/s with the SEC or other regulatory agencies; to make GAAP statements publicly available on a periodic basis
If there is a private subsidiary or a public(parent); subsidiary is still private. Info in consoldiated statements must be incompliance with big GAAP though
PCC
Can elect to adopt a PCC alternative standard at any time
No retroactive application is required, no requirement to assess preferability is required
Modified standards for little gaap
Goodwill - can be amortized on a sl basis over 10 years if it is appropriate; Assigned to a reporting unit and tested for impairment when a triggering event occurs
Intangible assets - not required to recognize intangibles that cannot be sold or licensed independent from the business (e.g. customer contracts, relationships, non-competes) can be lumped together with goodwill and amortize
Hedge Accounting - applies only to swaps that convert variable rate debt to fixed rate debt (a cash flow hedge) - enitity may assume 100% effectiveness; can use a practical epedient of settlement value
Applying VIE Criteria to Common Control Leasing Arrangements - expempt from applying this
Liquidation Basis
needs to have imminent liquidation; likelihood is remote that the org will return from liquidation
Assets are measured at the amount of cash we expect at liquidation – recognize assets at this basis even if they were not on books (e.g. coke trademark)
Liabilities are measured in accordance with GAAP
*Should not anticipate being released from these
Accrue the costs relate to liquidation and any income expected to earn during this time
