Accounting for Carve out Financial Statements
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Business Overhead Expense Disability Insurance Plan
A benefit of your membership! INSURANCE SPECIALISTS, INC. BUSINESS OVERHEAD EXPENSE DISABILITY INSURANCE PLAN Affordable Business Overhead Expense Disability Insurance, designed for small professional practices. 0188490 INSURANCE SPECIALISTS, INC. BUSINESS OVERHEAD EXPENSE DISABILITY INSURANCE PLAN Peace of mind for you and your practice Whether you are just starting your own professional practice or growing the one you already have, you know how fast your financial obligations can add up. Employee salaries and insurance premiums, rent, utilities, real estate taxes, are just some of your regular monthly practice expenses. How would you cover those expenses if you were disabled and couldn’t work for months? How long could your business survive if you weren’t there practicing? The Business Overhead Expense Disability Insurance (BOE) Plan can help keep your practice open and viable during periods of disability. Whether you return after a disability or choose to sell your practice, its marketable value can remain intact with good business overhead insurance available to you. If you become disabled, the Plan reimburses you for your regular monthly business expenses. Separate from your disability income insurance coverage that protects the money you earn, BOE coverage could make the difference between keeping the doors of your practice open during a disability and having to close it permanently. The Business Overhead Expense Disability Insurance Plan offers: Apply today for this • Up to $20,000 of monthly coverage for eligible business expenses. important coverage! Go to www.isi1959.com and download a • Coverage for disability for up to 24 months Request for Coverage Form from our website. -
Are Accruals During Initial Public Offerings Opportunistic?
Review of Accounting Studies, 3, 175–208 (1998) c 1998 Kluwer Academic Publishers, Boston. Manufactured in The Netherlands. Are Accruals during Initial Public Offerings Opportunistic? SIEW HONG TEOH [email protected] University of Michigan Business School, Ann Arbor, MI 48109-1234 T. J. WONG Hong Kong University of Science and Technology GITA R. RAO Colonial Management Associates Abstract. We find evidence that initial public offering (IPO) firms, on average, have high positive issue-year earnings and abnormal accruals, followed by poor long-run earnings and negative abnormal accruals. The IPO- year abnormal, and not expected, accruals explain the cross-sectional variation in post-issue earnings and stock returns. The results are robust with respect to alternative abnormal accruals and earnings performance measures. IPO firms adopt more income-increasing depreciation policies when they deviate from similar prior performance same industry non-issuers, and they provide significantly less for uncollectible accounts receivable than their matched non-issuers. The results taken together suggest opportunistic earnings management partially explains the new issues anomaly. Accrual accounting provides managers with discretion in the reporting of earnings. This allows financial reports to reflect managerial information about underlying economic con- ditions more accurately than is possible with a strictly mechanical reporting rule. However, if in some circumstances managers wish to mislead investors, discretion provides greater scope for obscuring true underlying firm performance. The incentives to manage earnings may be especially strong when the firm is planning to sell shares to the market, as in an initial public offering (IPO). IPOs are a major corporate event as evidenced by the size of the IPO market. -
Discussion of Theoretical-Practical Aspects of Squeeze Out
Littera Scripta, 2019, Volume 12, Issue 1 Discussion of theoretical-practical aspects of squeeze out Iveta Sedlakova, Katarina Kramarova, Ladislav Vagner University of Zilina, The Faculty of Operation and Economics of Transport and Communications, Univerzitna 1, Zilina 010 01, Slovak Republic Abstract The presented article has mainly a nature of theoretical discussion on the issue of squeeze out. The squeeze out entitles a majority shareholder to exercise his rights to buy out remaining shares of an offeree company. It a specific transaction mechanism with an impact on shareholders, offeree company, procedural regulation of the transfer of ownership rights arising from shares, methodological aspects of determining a squeeze out price of shares of minority shareholders, efficiency of capital markets etc. In case of Slovakia, the squeeze out has been used for more than one decade, however the number of such kind transactions is low. The main objective of the article is to point on specifics of that transaction and methodological aspects of determination of a general value of shares as a criterion of a fair price relying on basic attributes of procedural regulation of squeeze out in Slovakia, synthesis of knowledge from empirical studies, existing legal and financial theory as well practical experience one of the authors. Keywords: consideration, fair price, general value, share, squeeze out Introduction Determining the value of a company (business valuation), parts of a company, its assets or other property is not a new instrument from the view of the Slovak (or Czechoslovak) economy. Its existence was already evident at a time when our economy had the feature of central planned economy. -
Cost Accounting Standard on “Overheads”
COST ACCOUNTING STANDARD ON “OVERHEADS” The following is the text of the COST ACCOUNTING STANDARD 3 (CAS- 3) issued by the Council of the Institute of Cost and Works Accountants of India on “Overheads”. The standard deals with the method of collection, allocation, apportionment and absorption of overheads” In this Standard, the standard portions have been set in bold italic type. These should be read in the context of the background material which has been set in normal type. 1. Introduction 1.1 In Cost Accounting the analysis and collection of overheads, their allocation and apportionment to different cost centres and absorption to products or services plays an important role in determination of cost as well as control purposes. A system of better distribution of overheads can only ensure greater accuracy in determination of cost of products or services. It is, therefore, necessary to follow standard practices for allocation, apportionment and absorption of overheads for preparation of cost statements. 2. Objective 2.1 The standard is to prescribe the methods of collection, allocation, apportionment of overheads to different cost centres and absorption thereof to products or services on a consistent and uniform basis in the preparation of cost statements and to facilitate inter-firm and intra-firm comparison. 2.2 The standardization of collection, allocation, apportionment and absorption of overheads is to provide a scientific basis for determination of cost of different activities, products, services, assets, etc. 2.3 The standard is to facilitate in taking commercial and strategic management ` decisions such as resource allocation, product mix optimization, make or buy decisions, price fixation etc. -
How to Calculate Goodwill – and Why It Exists
How to Calculate Goodwill – and Why It Exists Would You Like a Write-Up with Your Plug? This Video: We Haven’t Covered This Before?!! I was looking at this channel the other day and realized that we had videos on Negative Goodwill and Purchase Price Allocation for Noncontrolling Interests… But nothing on a far more basic topic: how to calculate Goodwill in the first place! This Video: We Haven’t Covered This Before?!! Also, we get a surprising number of questions about this topic, even though there’s detailed coverage of it in our guides and courses… and lots of articles online! So, here goes, starting with why Goodwill exists and a simple example: Why Goodwill Exists • SHORT ANSWER: Goodwill is an accounting construct that exists because in M&A deals, Buyers almost always pay more than what Sellers’ Balance Sheets are worth (i.e., Assets – Liabilities) • The Buyer “gets” all the Seller’s Assets and Liabilities, so that makes its Balance Sheet go out of balance when a deal closes • We create Goodwill to fix this imbalance and ensure that Assets = Liabilities + Equity on the Combined Balance Sheet • Basic Calculation: Goodwill = Equity Purchase Price – Seller’s Common Shareholders’ Equity + Seller’s Existing Goodwill +/- Other Adjustments to Seller’s Balance Sheet Why Goodwill Exists – Simple Example • EX: Buyer pays $1000 in Cash for the Seller, and the Seller has $1500 in Assets, $600 in Liabilities, and Common Equity of $900 • Next: Seller’s Common Equity is written down in the deal, and the Buyer’s Assets go down by $1000, then up -
Economic Value Added (EVA™)
UBS Global Research Valuation Series Economic Value Added (EVA™) EVA™: Use and abuse EVA™ is increasingly used for corporate and management appraisal and evaluation. The approach has gained so much popularity that it is now influencing the style, content and focus of sell-side research. While EVA™ can provide some useful insights into companies, as can many other techniques, it has shortcomings that should not be overlooked. ÆEVA™is based on a very simple concept; if a company earns a return that is greater than expected, then value has been added. In each year, the EVA™ is the difference between the actual and expected return (return spread) multiplied by the invested capital. The return spread and EVA™ are used as performance indicators. In addition, the total value added is the sum of all future annual EVA™s (in present value terms) and if this is added to the invested capital, it gives the total value of the company. ÆIn practice, the returns earned and the invested capital are based on accounting data where as the return demanded by investors is based on market (or economic) data. Consequently, EVA™ measures the difference between accounting and economic data and can, therefore, be influenced by different accounting practices and by management ‘adjustments’ to accounting information. Management may be incentivised to do this given that reward structures may be linked to EVA™. In an attempt to address these problems, a multitude of adjustments need to be made to the accounting data but these are often judgmental and restricted by the level of accounting disclosure. -
Definitions Attributed to Goodwill in the Economic
View metadata, citation and similar papers at core.ac.uk brought to you by CORE ECOFORUM provided by Ecoforum Journal (University of Suceava, Romania) [Volume 6, Issue 3(13), 2017] DEFINITIONS ATTRIBUTED TO GOODWILL IN THE ECONOMIC LITERATURE AND CONCEPTUAL DELIMITATIONS REGARDING THE WAY OF VALUATION AND EXPOSURE OF THIS PATRIMONIAL COMPONENT IN THE BALANCE SHEET Cristina-Gabriela LELIUC COSMULESE Stefan cel Mare University of Suceava, Romania, [email protected], Veronica GROSU Stefan cel Mare University of Suceava, Romania [email protected], Elena HLACIUC Stefan cel Mare University of Suceava, Romania [email protected] Abstract The purpose of this paper is to provide an exhaustive perspective on the evolution over time of the definition of the goodwill. The present paper is part of the research done in the doctoral thesis and we consider it very important to have a complete understanding of the concept studied to develop it further. In our demarche we used a chronological analysis and we revised definitions from the late 1800s to today. At the same time, it is desired to clarify and analyze the concept of goodwill both from the point of view of the accounting literature and the economic practice (regarding the evaluation and exposure of this patrimonial component in the balance sheet) and to a lesser extent in the legal aspect. Definitions are given by prominent researchers of time, published in magazines and books of a high rank or offered by international accounting commissions. In our opinion, this study is beneficial to researchers in the idea that it offers a complete picture of its concept and history, being a study focusing on the international accounting of goodwill in the past, present and future. -
Business Overhead Expense Worksheet
Business Overhead Expense Worksheet When completing this worksheet, keep in mind that as a general rule, if a regular and normal business expense incurred in the operation of the proposed insured business owner’s office or place of business will continue (because of contractual obligations or the necessity of the expense for maintenance) after that person becomes disable, that expense will most likely be covered. However, if the expense is income-generating, is for a new capital improvement or increases the net worth of the business, it most likely will not be covered. Type of Business Normal Monthly Type of Business Normal Monthly Overhead Expense Outlay Overhead Expense Outlay 1. Rental Real Estate Depreciation, or 8. Professional license & dues $ Business Mortgage Principal 9. Business-related loan interest (show only one) $ including business-related mortgage 2. Utilities interest $ a. Heat $ 10. Replacement salary (calculated as b. Power $ the lesser of 50% of the proposed insured business owner’s salary or c. Water/Sewer $ 50% of all other eligible expenses) $ d. Fixed Telephone/Fax $ 11. Either business-related depreciation 3. Compensation of employees or payment on loan principal (show (including members of the proposed one or the other but not both) $ insured owner’s immediate family who have been continuously 12. Car, truck & equipment leases (any employed by the business for at least portion of lease which is for personal usage is not covered) 90 days) $ NOTE: Compensation to partners is 13. Telephone answering service and/or not covered in overhead expense. $ mobile paging system $ 4. Business related taxes (only those 14. -
Squeeze-Outs and Freeze-Outs in Limited Liability Companies
Washington University Law Review Volume 73 Issue 2 Limited Liability Companies January 1995 Squeeze-Outs and Freeze-Outs in Limited Liability Companies Franklin A. Gevurtz University of the Pacific Follow this and additional works at: https://openscholarship.wustl.edu/law_lawreview Part of the Business Organizations Law Commons Recommended Citation Franklin A. Gevurtz, Squeeze-Outs and Freeze-Outs in Limited Liability Companies, 73 WASH. U. L. Q. 497 (1995). Available at: https://openscholarship.wustl.edu/law_lawreview/vol73/iss2/5 This F. Hodge O'Neal Corporate and Securities Law Symposium is brought to you for free and open access by the Law School at Washington University Open Scholarship. It has been accepted for inclusion in Washington University Law Review by an authorized administrator of Washington University Open Scholarship. For more information, please contact [email protected]. SQUEEZE-OUTS AND FREEZE-OUTS IN LIMITED LIABILITY COMPANIES FRANKLIN A. GEVURTZ* I. INTRODUCTION In only six years since the Internal Revenue Service gave its blessing to the limited liability company (LLC), statutes providing for this new business entity have spread across the country. Presently, all but a few states have such laws.2 With its combination of limited liability for the owners and partnership-style flow-through tax treatment, the LLC provides an attractive option for closely held businesses.3 Indeed, it is not beyond the realm of reality to suggest that before too long the LLC may largely render the partnership, limited partnership and closely held corporation obsolete. While this new business form raises many questions, a most appropriate one for this symposium is to consider the prospects for squeeze-outs and freeze-outs in LLCs. -
Financial Reporting Framework for Small- and Medium-Sized Entities Comparisons of the FRF for Smestm Reporting
Private Companies Practice Section March 2018 Financial Reporting Framework for Small- and Medium-Sized Entities Comparisons of the FRF for SMEsTM Reporting Framework to Other Bases of Accounting s e i t i t n E d e z i S FRF - for m u i d e M d SMEs n a - ll aicpa.org/FRF-SMEs a m S F r i o na f n rk ci o al R ew eporting Fram ™ Comparisons of the FRF for SMEs Reporting Framework to Other Bases of Accounting Introduction Owner-managers of SMEs, CPAs serving SMEs, users of SME financial statements, and other stakeholders are often familiar with the tax basis of accounting and U.S. GAAP. Also, many stakeholders are following the implementation of the International Financial Reporting Standard for Small- and Medium-Sized Entities (IFRS for SMEs) around the world as its use continues to expand and its implications for the U.S. marketplace continue to grow. As such, these stakeholders are interested in understanding how the principles and criteria included in the FRF for SMEs accounting framework compare to those other bases of accounting. To assist those stakeholders, comparisons of the FRF for SMEs accounting framework to (1) the tax basis, (2) U.S. GAAP, and (3) IFRS for SMEs are presented on the following pages. These comparisons are not all inclusive. Rather, the following comparisons are made at a high level and are intended to draw attention to differences between the FRF for SMEs accounting framework and the other bases of accounting on certain accounting and financial reporting matters. -
Absorption Costing - Overview
Absorption Costing - Overview 1. Overview of Absorption costing and Variable Costing 2. Review how costs for Manufacturing are transferred to the product 3. Job Order Vs. Process Costing 4. Overhead Application - Under applied Overhead - Over applied overhead 5. Problems with Absorption Costing 6. Concluding Comments Absorption Costing The focus of this class is on how to allocate manufacturing costs to the product. - Direct Materials - Direct Labor - Overhead Absorption costing is a process of tracing the variable costs of production and the fixed costs of production to the product. Variable Costing traces only the variable costs of production to the product and the fixed costs of production are treated as period expenses. Absorption Costing There are three different types of Absorption Costing Systems: - Job Order Costing - Process Costing - ABC Costing In Job Order Costing costs are assigned to the product in Batches or lots. - Printing - Furniture manufacturing - Bicycle Manufacturing In Process Costing, costs are systematically assigned to the product, since there are no discreet batches to assign costs. - Oil Distilling - Soda Manufacturing ABC Costing assigns cost from cost centers to the product - Best in a multi product firm, where there are different volumes Absorption Costing A simplified view of Production: Introduce Raw Manufacture Store finished Sell Finished Materials Product goods Goods 1. Direct materials 1. Direct labor 1. Production process are purchased applied to completed 2. Direct materials product 2. Goods are shipped are placed into 2. Overhead costs for sale production are incurred Absorption Costing How do we account for the production process? 1. Direct materials are purchased and recorded as an asset. -
Example: Accounting in a Job Order Costing System
ACCT 102 - Professor Johnson Lecture Notes – Chapter 17: ACTIVITY-BASED COSTING AND ANALYSIS ASSIGNING OVERHEAD COSTS Background In Chapter 14, we learned that product costs consist of direct materials, direct labor, and factory overhead. We also understood that direct materials are assigned to product costs via the materials requisition form, and direct labor is allocated to product costs using time tickets. Direct material and direct labor costs are easily traceable to these source documents, so accuracy in assigning these costs is not difficult to achieve. However, factory overhead cannot be allocated to products using source documents. We must use an allocation system to assign overhead costs, such as factory maintenance and factory supervisors’ salaries, to products. As factories become more and more mechanized, factory overhead becomes a larger portion of product costs. As a result, assigning factory overhead to individual products manufactured becomes more important. This chapter introduces three methods of allocating overhead: 1. The single plantwide overhead rate method 2. The departmental overhead rate method 3. The activity-based costing (“ABC”) method. Why is this important? Most companies produce more than one product. An important managerial accounting function is to accurately allocate direct materials, direct labor, and factory overhead costs to each product so that the cost of each product is available. Management can then determine the gross profit per product, and use this cost data to set appropriate selling prices for each product. If the product costs are not allocated accurately, the gross profit for each product will be incorrect, and management may set inappropriate selling prices. Plantwide Overhead Rate Method The plantwide overhead rate method is practical when (1) overhead costs are closely related to production volume, or (2) a company produces only one product.