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What's Happening with FASB 141(R) and 160
by Greg Kowieski, Assurance Senior Manager, Moss Adams
As you may already be aware, the accounting world received a holiday treat with the December issuances of FASB Statements No. 141 (R), Business Combinations, and No. 160, Noncontrolling Interests in Consolidated Financial Statements.
As you read this, please be aware that the statements become applicable for fiscal years beginning after December 15, 2008 and earlier application is not permitted. For businesses that are considering business combination activities, they
could perceive advantages/disadvantages with applying current FAS 141 versus new FAS 141(R) and they should become aware of the new standard to be able to make an optimal decision.
FAS 141(R) is an expansive document (358 pages). Refer to the
FASB-drafted summary for their summary. Following are certain of the more dramatic changes the Statement makes:
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Up-front expensing of all transaction costs;
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Elimination of ability to create restructuring accruals in purchase accounting;
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100 percent step-up even when less than 100 percent is acquired;
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New accounting for contingencies which further limits the applicability of FASB Statement No. 5, Accounting for Contingencies;
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Up-front gains for bargain purchases;
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Capitalized in-process research and development; and others.
FAS 141R amends FASB Statement No. 109, Accounting for Income Taxes, and will require subsequent changes to valuation allowances recorded in purchase accounting to be recorded as current income tax expense (and this guidance will apply to
all acquired valuation allowances, regardless of when the acquisition occurred).
FAS 160 is less expansive than FAS 141(R) but it too requires changes to long-standing practices. In particular, upon adoption of FAS 160, for balance sheet presentation, minority interests will be recorded within equity and so-called
"mezzanine" display will not be permitted. In income statements, the amount of income attributable to the minority interest will not be a deduction that impacts net income. As a result of these requirements, various financial statements
ratios will be impacted.
The discussion here is very high-level and is intended to give you a high-level awareness of these important new standards. It will be important in the coming year for the accounting practitioners learn more about these standards.
If you have questions about these new standards, check out the documents themselves or contact Greg Kowieski at
greg.kowieski@mossadams.com or 858-627-1406.
Your Holding Company May Reduce U.S. and International Tax Burdens
by Michael Ferguson and Bill Armstrong, International Tax Partners, Moss Adams LLP
Whether in reaction to competitive pressures or the pursuit of more lucrative business opportunities, U.S. based technology companies find themselves expanding into international markets earlier and more substantially than ever before.
Without intimate knowledge of international tax rules, a company can end up creating a situation with a significant tax burden above and beyond their actual obligation – which can also be costly to repair.
The U.S. Internal Revenue Code remains one of the most complex systems of taxation in the world. Add to this the necessity of having to deal with similar issues in multiple taxing jurisdictions, and it's no wonder why corporate tax
departments spend a disproportionate amount of resources managing international tax issues.
Unfortunately, many new multinational companies find themselves in a less than optimal tax structure, particularly after forming new foreign entities as direct subsidiaries of the U.S. parent company.
Read
the entire article to learn about the benefits that can be achieved through the use of an intermediate holding company as an alternative to the traditional flat corporate structure.
For questions, please contact Bill Armstrong at
bill.armstrong@mossadams.com; 949-221-4077, or Michael Ferguson at
michael.ferguson@mossadams.com; 206-302-6506.
Moss Adams Supports 2008 Clean Tech Investor Summit
February 6-7 in Palm Springs, CA
Moss Adams is proud to again sponsor the Clean Tech Investor Summit -- fostering innovation & investment opportunities in clean technologies. Last year, the annual gathering attracted a sold-out crowd of 450 attendees, and this year we
anticipate an even larger turnout.
The conference is a joint effort between International Business Forum and Clean Edge, Inc. to unite the venture capital/private equity investment community along with institutional investors, major corporations and entrepreneurs.
If you're involved in a green company, learn more on the
Clean Tech Investor Summit web site.
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