Congress Passes Extenders Package, ABLE Act; Cuts IRS Budget
In the a flurry of year-end activity, Congress has approved the Tax Increase Prevention Act of 2014 (HR 5771). The new law extends so-called "tax extenders" retroactively for one year (through 2014). It also includes the Achieving a Better Life Experience (ABLE) Act, creating tax-favored savings accounts for individuals with disabilities along with some tax-related offsets. Before adjourning, Congress also approved an Omnibus Spending Agreement for fiscal year (FY) 2015, which cuts funding for the IRS. President Obama has indicated that he will sign both the Omnibus Agreement and H.R. 5771 bills as soon as they reach his desk.
The Financial Accounting Standards Board (FASB) recently issued Accounting Standards Update No. (ASU) 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Now management, not auditors, will be responsible for assessing if there’s a going concern issue. Disclosure will be required when there’s substantial doubt about business continuity or substantial doubt has been alleviated by management’s mitigating plans.
The Finance Accounting Standards Board (FASB) approved three exceptions to the Generally Accepted Accounting Principals (GAAP) for private companies. The exceptions are:
- Allow private companies to choose a simplified hedge accounting approach to their financial reporting when they enter into interest rate swaps to economically convert their variable-rate interest payments to fixed-rate interest payments.
- Give private companies the ability to amortize goodwill acquired in a business combination.
- Elect not to separately recognize and measure certain intangible assets acquired in a business combination such as noncompetition agreements and customer-related intangible assets that are not capable of being sold or licensed independently from the other assets of a business.
- Allow a private company to elect – under certain circumstances – not to consolidate variable-interest entities (VIEs) in common-control leasing arrangements.
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