The reporting entity should evaluate whether the option is a derivative and should be accounted for under ASC 815. Payments to obtain an option to acquire PP&E.However, rent, depreciation, and other occupancy costs associated with the physical space occupied by employees should be charged to expense as incurred, as they are not directly identifiable costs. Additionally, only the service component of net periodic pension and postretirement costs should be capitalized. These costs include payroll and payroll benefit-related costs (e.g., costs of health insurance) for employees who devote time to a PP&E pre-acquisition stage activity, to the extent of time the employees spent directly on that activity and in proportion to the total hours employed (including compensated absences). Certain costs directly related to pre-acquisition activities performed by the reporting entity (or by third parties who are not independent of the reporting entity) for the specific PP&E.Incremental direct costs of PP&E pre-acquisition activities incurred for the specific PP&E in transactions with independent third parties.Transfers and servicing of financial assetsÄirectly identifiable costs include the following: Revenue from contracts with customers (ASC 606) Loans and investments (post ASU 2016-13 and ASC 326) Investments in debt and equity securities (pre ASU 2016-13) Insurance contracts for insurance entities (pre ASU 2018-12) Insurance contracts for insurance entities (post ASU 2018-12) IFRS and US GAAP: Similarities and differences Business combinations and noncontrolling interestsÄ®quity method investments and joint ventures
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