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Timing of Revenue Recognition: Considerations for Service Organizations
Posted by Joyce Masse Troy on Thu, Mar 12, 2020 @ 01:06 PM

By nature of their business, service organizations may face challenges with their determination of when revenue from contracts should be recognized under ASC Topic 606, Revenue from Contracts with Customers. In addition to the obvious accounting issues associated with timing of revenue recognition, this determination will also impact their financial statement disclosure requirements as it relates to revenue recognition.

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Topics: accounting, Joyce Masse Troy, Revenue Recognition Standard, Revenue recognition, Joyce Troy, hedging

Six Accounting Updates You Don’t Want to Forget for Year-End
Posted by Joyce Masse Troy on Wed, Dec 6, 2017 @ 04:51 PM

Now is the time to get your financial reporting in order for year-end. Several major accounting standards took effect in 2017, and you will want to make sure you're prepared for them. Some of the changes may require updates to processes and controls as well as internal and external year-end reporting.

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Topics: Joyce Masse Troy, financial reporting, accounting standards update, accounting standards, Accounting Updates, Joyce Troy

Accounting for Certain Interest Rate Swaps for Private Companies Simplified
Posted by Joyce Masse Troy on Wed, Mar 19, 2014 @ 08:35 PM

In January 2014, the FASB released Accounting Standard Update 2014-03 Derivatives and Hedging (Topic 815): Accounting for Certain Receive – Variable, Pay – Fixed Interest Rate Swaps (ASU 2014-03). ASU 2014-03 is the second standard issued by the FASB upon endorsement of a consensus of the Private Company Council that is specifically designed to meet the needs of private companies by providing an alternative within US GAAP.

The Issue

Companies that are unable to borrow at fixed rates often rely on variable-rate debt combined with an interest rate swap. In effect, they receive variable rates and pay fixed rates. The net effect is similar to borrowing at fixed rates. But the accounting and disclosure requirements are considerably more complex when an interest rate swap is involved.

Current accounting standards require companies to recognize all their derivative instruments (including interest swaps) on their balance sheets as assets or liabilities and to measure them at fair value. The standards allow companies to mitigate the income statement effect of any swings in fair value attributable to interest rate risks by applying an accounting method known as "cash flow hedge" accounting. This technique has the effect of presenting interest expense in the income statement as if the company had a fixed rate debt. But some entities, especially private companies, have expressed concerns about the practical difficulties involved in applying the current standards.

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Topics: private companies, private company, Joyce Masse Troy, FASB

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