Archive for April, 2010

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FASB issues Accounting Standards Update No. 2010-17 Milestone Method of Revenue Recognition

Friday, April 30th, 2010

By: Robert L. Sommerville, CPA

The FASB recently issued Accounting Standards Update No. 2010-17, Revenue Recognition—Milestone Method (Topic 605): Milestone Method of Revenue Recognition (a consensus of the FASB Emerging Issues Task Force).  The new guidance is effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. Early adoption is permitted. Accounting Standards Update.

Essentially, this is some more tweaking of the milestone method by the EITF impacting research and development-type contract.  The main factors seem to be more emphasis that a milestone be “substantive” and that all aspects of the milestone achieved before revenue can be recognized.  Here is an excerpt:

“The consideration earned by achieving the milestone should:

1. Be commensurate with either of the following:
a. The vendor’s performance to achieve the milestone
b. The enhancement of the value of the item delivered as a result of a specific outcome resulting from the vendor’s performance to achieve the milestone

2. Relate solely to past performance

3. Be reasonable relative to all deliverables and payment terms in the arrangement.

A milestone should be considered substantive in its entirety. An individual milestone may not be bifurcated. An arrangement may include more than one milestone, and each milestone should be evaluated separately to determine whether the milestone is substantive. Accordingly, an arrangement may contain both substantive and nonsubstantive milestones.”

Still a lot of judgment involved.  Welcome to “principles-based” accounting!

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Posted in Tax | 3 Comments »

Congress Passes Groundbreaking Health Reform Law

Monday, April 26th, 2010

On March 30, 2010, The President signed the Health Care and Education Reconciliation Act of 2010 (Reconciliation Act). The Reconciliation Act modifies the legislation recently signed into law that contains the bulk of the health reform law, the Patient Protection and Affordable Care Act (Health Care Act). The Reconciliation Act also includes new provisions that were not part of the Health Care Act.

We have created a summary of certain key tax provisions in these new health reform Acts and their effective dates that may impact you and your business. The summary includes the following areas:

Health-Related Revenue Raisers

  • Additional Hospital Insurance tax for high wage workers
  • Surtax on unearned income
  • Excise tax on high-cost employer-sponsored health coverage
  • New limit on health FSA contributions
  • Restricted definition of medical expenses for employer provided coverage
  • Increased tax on nonqualifying HSA or Archer MSA distributions
  • Modified threshold for claiming medical expense deductions
  • Deduction for employer Medicare Part D is eliminated

Tax Changes Relating to Universal Health Coverage Mandate

  • Penalty for remaining uninsured
  • Low-income tax credits for participating in health exchanges
  • Employer responsibilities
  • “Free choice vouchers”
  • Tax credits for small employers offering health coverage
  • Dependent coverage in employer health plans

To access the detailed summary of these tax provisions, click this link: http://tinyurl.com/ybcu52a

Posted in Governance, Tax | 2 Comments »

HIRE Act provides valuable tax incentives to businesses

Friday, April 23rd, 2010

The Hiring Incentives to Restore Employment (HIRE) act, signed into law March 18, provides tax incentives for hiring and retaining workers and purchasing equipment and many other business assets. http://tinyurl.com/ydeyowz

Posted in Tax | 2 Comments »

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