irs notice 2018-76<\/a>. for example, it explains in detail the concept of “entertainment,” which may seem intuitive, but isn’t. the notice says that “entertainment” does not include activities which \u2013 although satisfying personal, living or family needs of an individual \u2013 are clearly not regarded as constituting entertainment. these activities might be reimbursed by an employer to an employee, or might include a hotel room maintained by an employer for lodging of employees while in business travel status.<\/p>\nhowever, if a business provides a hotel room or an automobile to an employee who is on vacation, that would constitute entertainment of the employee.<\/p>\n
do not try to get around the “separation” guidance \u2013 the irs is strict here. the notice gives an example of entertaining clients in a luxury suite at a basketball game. the cost of the tickets and suite is entertainment and not deductible. if the food provided in the suite is included in the suite rental and is not separated out, it is not deductible either.<\/p>\n
however, if the invoice does separate out the cost of the food, it will be deductible to the extent allowed.<\/p>\n
but this is not an invitation to manipulate an invoice so it puts a disproportionate amount of money into the “food” column. the notice also specifically warns businesses against trying to circumvent the entertainment disallowance rule by inflating the amount charged for food and beverages.<\/p>\n
the irs may issue additional guidance on clarifying when business meal expenses may be deducted in the future.<\/p>\n
understanding revenue recognition<\/strong><\/p>\naccounting standards update no. 2014-09, issued by the financial accounting standards board (fasb), establishes principles to report useful information to users of financial statements about the nature, timing and uncertainty of revenue from contracts with customers.<\/p>\n
in fact, the international financial reporting standards (ifrs) issued by the international accounting standards board (iasb) were joined with the fasb for a converged standard on the recognition of revenue from contracts with customers.<\/p>\n
revenue from contracts with customers<\/strong><\/p>\nrevenue from contracts with customers (topic 606) removes inconsistencies and weaknesses in existing revenue requirements. in addition, it<\/p>\n
\nprovides a more robust framework for addressing revenue issues;<\/li>\n improves comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets;<\/li>\n provides more useful information to users of financial statements through improved disclosure requirements; and<\/li>\n simplifies the preparation of financial statements by reducing the number of requirements to which an organization must refer.<\/li>\n<\/ul>\nif your client’s business enters into contracts with customers to transfer goods or services or to transfer nonfinancial assets, this guidance will be useful. insurance contracts and lease contracts fall within the scope of other fasb standards.<\/p>\n
anyone who is part of a public organization has been aware of this guidance and using it for annual reporting periods since december 15, 2017, and for interim reporting periods, too. nonpublic companies, including not-for-profits, saw the guidance kick in for annual reporting periods after december 15, 2018, including interim reporting periods.<\/p>\n
financial reporting and comparability<\/strong><\/p>\nthe upshot is improved financial reporting of revenue and improved comparability of the top line in financial statements globally. fasb handles u.s. generally accepted accounting principles (gaap). instead of having to deal with different accounting for transactions that looked economically similar, your clients will deal with just one standard. also, they\u2019ll be able to offer sufficient detail, without having to be overly prescriptive and avoid conflicts between ifrs and gaap requirements.<\/p>\n
they should also be pleased by the quality and consistency of how revenue is reported and the improved comparability in financial statements domestically and globally. fasb chairman russell golden is satisfied that this convergence improves financial reporting by eliminating a major source of inconsistency in gaap. he called it \u201ca major first step, but not the end of the process.\u201d<\/p>\n
a smooth transition to the new requirement is being worked on by fasb and iasb. in the meantime, be prepared to provide help with these clarifications.<\/p>\n
what to know about lease accounting<\/strong><\/p>\nthe financial standards accounting board has issued an accounting standards update (asu) aimed at improving financial reporting about leasing transactions. the asu affects all companies and organizations that lease such assets as real estate, airplanes and manufacturing equipment.<\/p>\n
lessees are required to recognize on balance sheets the assets and liabilities for the rights and obligations created by those leases. the update responds to requests from financial statement users for a more faithful representation of an organization\u2019s leasing activities.<\/p>\n
classifications<\/strong><\/p>\nas a result, lessees will be required to recognize assets and liabilities for leases with terms of more than 12 months. the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.<\/p>\n
for finance leases, interest on the lease liability is required to be recognized separately from the amortization of the right-to-use asset in the statement of comprehensive income. repayments of the principal portion of the lease liability are to be classified as financing activities in the statement of cash flows, whereas payments of interest on liability and variable lease payments are to be classified as operating activities.<\/p>\n
for operating leases, a single lease cost is to be recognized in the statement of comprehensive income based on the allocation of the cost of the lease over the lease term, generally on the straight-line basis. all cash payments are to be classified within operating activities on the statement of cash flows.<\/p>\n
disclosures<\/strong><\/p>\nthis is consistent with current generally accepted accounting principles, but unlike today\u2019s gaap, which requires only capital leases to be recognized on the balance sheet, the new asu will require both types of leases to be recognized on the balance sheet.<\/p>\n
the asu also will require disclosures to help financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements that provide additional information about the amounts recorded in financial statements.<\/p>\n
this guidance doesn\u2019t apply to the following:<\/p>\n
\nleases of intangible assets<\/li>\n leases to explore minerals, oil, natural gas and similar nonregenerative resources<\/li>\n leases of biological assets such as timber, leases of inventory, or leases of assets under construction<\/li>\n<\/ul>\nlessor accounting will remain largely unchanged from current gaap, but the asu contains some targeted improvements that will align \u2013 where necessary \u2013 lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014.<\/p>\n
financial reporting<\/strong><\/p>\nthe fasb and the international accounting standards board (iasb) first embarked on a joint project in 2006 to improve the financial reporting of leasing activities. since then, the fasb and the iasb have issued three documents for public comment that generated more than 1,700 comment letters.<\/p>\n
these lease standards intend to provide investors globally with more transparent, comparable information about lease obligations held by companies and organizations. the fasb\u2019s asu on leases will take effect for fiscal years and interim periods within the fiscal years beginning after december 15, 2019, and for interim periods within fiscal years beginning after december 15, 2020.<\/p>\n
early application will be permitted for all organizations. the new guidance establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases.<\/p>\n","protected":false},"excerpt":{"rendered":"
some critical clarifications.<\/strong> \nby barry j. friedman, cpa<\/em> \nindustrynewsletters<\/a><\/em><\/p>\n","protected":false},"author":2980,"featured_media":56041,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","footnotes":""},"categories":[1905,3120,3002],"tags":[],"class_list":["post-58903","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-clients-and-service","category-pro-member-exclusive","category-special"],"acf":[],"yoast_head":"\npadding deductions? clients need to be warned - 卡塔尔世界杯常规比赛时间<\/title>\n \n \n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n \n \n \n \n \n\t \n\t \n\t \n