Variable Consideration (It’s Probable)

ASC 606, Revenues from Contracts with Customers For most privately-held construction companies, ASC 606, Revenues from Contracts with Customers, has been effective for over two years. For many construction companies, the transition to ASC 606 was not too bad, but it did make subtle changes in certain areas that continue to raise questions. One of those areas is estimating the contract price, i.e., total estimated consideration due under the long-term contract. ASC 606-10-32-2 states: “An entity shall consider the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration to which Read More »

Leases – 10 Takeaways

It’s Almost Time To Implement ASC 842 The implementation date for the new lease standard for private companies is just around the corner. As amended by ASU 2020-5, the extended effective date is fiscal years beginning after December 15, 2021 (i.e., January 1, 2022, for calendar year companies). It doesn’t apply to interim periods until 2023. That gives private companies a bit more breathing room, but not much. The new lease standards are codified in ASC 842. I suspect that many are not quite up to speed yet on the tenants of ASC 842. That’s understandable, given the pandemic, PPP Read More »

5 Things You Should Expect From Your CPA

And There Are More What should you expect from your CPA? What in-grained traits do you want them to have? You expect them to be honest, of course. That’s critically important. But what else? Do you want your accountant to be an air traffic controller watching and safeguarding your business assets and transactions? Many company controllers take that role. In this article, we drill down to the core to see what makes a good accountant tick. And from that, we identified the following five traits your CPA should possess. Organization and Concise Clarity. Organization is the defining attribute of an Read More »

How About Another Accounting Quiz? (Along with a Few More Answers)

Part II Last month we presented some questions (along with suggested answers) related to the Paycheck Protection Program. Part II of this Q&A blog will focus on construction accounting. Specifically, the spotlight will be on accounting for long-term construction contracts. Construction accounting can be somewhat counter-intuitive. For example, billings and revenue generally are not the same thing. Also, an asset nicknamed underbillings may cause considerable concern to end-users of the financial statements, such as the company’s surety. At the same time, a liability referred to as overbillings may be construed in a favorable light. So, without further ado, here we Read More »

How About An Accounting Quiz? (Along with a Few Answers)

Part 1 I recall from my college days when Dr. Baker, the dean of the business administration department, casually mentioned that we would have a quiz the very next class. So I prepared for a quiz, which was barely any preparation at all. As it turned out, the “quiz “was a 200-question mammoth examination, weighted to be half our course grade. Holy drop-the-course, Batman. Well, here’s an accounting quiz for you. But it’s not 200 questions, you do not have to prepare for it, and you will not be graded. You will find what I consider to be the best Read More »