Presentation on theme: "Winter Education Conference January 15, 2015"— Presentation transcript:
1Winter Education Conference January 15, 2015 west virginia chapterAccounting and Auditing UpdateWinter Education Conference January 15, 2015
2Norman C. Mosrie, CPA, CHFP, FHFMA Norman serves as Partner-in-Charge of Assurance for the Western Mid-Atlantic region focusing in the areas of healthcare, not-for-profit and insurance. A certified healthcare financial professional, Norman was previously a partner with a Big Four firm, where he worked for 24 years.With his involvement with the American Institute of Certified Public Accountants Healthcare Expert Panel and FASB not-for-profit advisory committee, Norman is actively involved in accounting, financial reporting, and other matters impacting the healthcare and not-for-profit industries.His significant healthcare experience includes financial reporting, acquisition due diligence, corporate compliance, process analysis, A-133 auditing and reporting requirements, and third-party reimbursement for various types of healthcare entities including academic medical centers, community hospitals, nursing homes, home health agencies, physician practices, and research organizations. He also has experience performing audits in accordance with Government Auditing Standards and OMB Circular A-133 including Medicaid.Norman has developed and led healthcare training programs at the local, area, and national levels.PROFESSIONAL AND CIVIC ORGANIZATIONSAmerican Institute of Certified Public Accountants (AICPA), Former Council Member and Healthcare Expert Panel Member, National Healthcare Conference Chairman, Alternative Investments TaskforceWest Virginia Society of Certified Public Accountants (WVSCPA), Past President and Board of DirectorsCharleston Chapter of WVSCPAs, Past PresidentFinancial Accounting Standards Board (FASB), Not-for-Profit Advisory CommitteeGovernment Finance Officers Association, Special Review Committee MemberMarshall University College of Business Advisory Board, PresidentHealthcare Financial Management Association, Past Board MemberMarshall University Alumni Association, Past Board MemberRotary Club, Past President and Paul Harris Fellow EDUCATIONMarshall University, Bachelor of Business Administration, Accounting, summa cum laudeCONTACT INFORMATION500 Virginia Street, EastSuite 800Charleston, WV 25301direct
3Topics ASU 214-09: Revenue Recognition Background and Overview FASB Project: NFP Financial Reporting ModelBusiness AssociatesRp-2014: New Morality Tables ReleasedCommon Practice Issues: RAC AuditsAccounting for ICD-10 CostsASU : Continuing Care Retirement Communities – Refundable Advance FeesASU : Classification of the Statement of the Sole Proceeds of Donated Financial Assets in the Statement of Cash FlowsASU : Obligations Resulting from Join and Several Liability ArrangementsASU : Services Received from Personnel of an AffiliateASU : Business Combinations – Pushdown AccountingASU : Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern
4Discuss recent accounting standards as well as emerging practice issues related to healthcare entities
5Both are important, but fall just short of 100% Coincidence…or NOT???IF…A B C D E F G H I J K L M N O P Q R S T U V W X Y ZEQUALS…Then…K+N+O+W+L+E+D+G+E= 96%H+A+R+D+W+O+R+K= 98%Both are important, but fall just short of 100%
9ASU 2014-09: Revenue Recognition Objective: single, principle-based revenue standardImprove accounting for contracts with customersMore robust framework for recognizing revenueIncreased comparability across industries and capital marketsBetter disclosuresSubstantially converged with IFRS on major provisions
10ASU : SummaryFASB created a new Topic 606 that will replace Topic 605 when this standard is adoptedASU will supersede most industry-specific guidanceCore principle is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or servicesGuidance specifies the accounting for an individual contract with a customer; however, as a practical expedient, an entity may apply guidance to a portfolio of contracts (or performance obligations) with similar characteristics if the entity reasonably expects that the effects on the financial statements would not differ materially from applying guidance to individual contracts
11Scope All contracts with customers, except Lease contractsInsurance contractsFinancial instrumentsGuaranteesNon-monetary exchanges between entities in the same line of business to facilitate sales to customersAlso excluded: contributions, collaborative arrangementsSales/Transfers of nonfinancial assets outside of the entity’s ordinary activities (Subtopic )Recognition and measurement guidance
12Five steps to apply standard Recognize revenue to depict the transfer of goods or services in an amount that reflects the consideration to which the entity expects to be entitledIdentify the contract(s) with a customerIdentify the performance obligations in the contractDetermine the transaction priceAllocate the transaction price to the performance obligations in the contractRecognize revenue when (or as) the entity satisfies a performance obligation12345
13Effective DatePublic business entities and certain not-for-profit entities including conduit bond obligorsFiscal years, and interim periods within those years, beginning after December 15, 2016 (no early adoption)All other entitiesFiscal years beginning after December 15, 2017, interim periods in fiscal years beginning after December 15, 2018 (can adopt at same time as public business entities)
14Transition Approaches The following chart summarizes the transition options available to entities (based on a calendar fiscal year for NFP conduit bond obligor)Transition Approach20162017Date of Cumulative Effect AdjustmentFull RetrospectiveRestate for all contractsApply to all contractsJanuary 1, 2016Retrospective Using One or More Practical ExpedientsRestate for all contracts except for contracts or estimates covered by the practical expedients elected by the entityCumulative Effect at the Date of AdoptionNo contracts restated; reported on the basis of legacy guidanceJanuary 1, 2017
15ASU 2014-09: Implementation FASB: Joint Transition Resource Group Significant effort likely to be expended as the U.S. moves from the current industry-specific guidance to this new, broader, principles-based approachFASB: Joint Transition Resource GroupTo identify and discuss broader issues, including those that may warrant follow-up standard-setting activity by the FASBSimilar to what we’ve done in the past following issuance of FAS 157 (Valuation Resource Group) and certain other broad standardsAICPA: Various Industry-focused GroupsIncludes one for Healthcare and one for NFPsWork to culminate in the issuance of a Revenue Recognition Guide
16AICPA Revenue Recognition Task Forces Develop a new Accounting Guide on Revenue RecognitionGuide to provide helpful hints and Illustrative examples on how to apply the standardGuidance will not be prescriptive but instead intended to be a resourceFull implementation issues will be posted for comment after review from the overall Revenue Recognition Working Group and FinRECList of issues by industry is posted on the AICPA website
17ASUAn entity shall consider the terms of the contract and its customary business practices in determining the transaction priceIndicates that the entity should consider its intention to offer price concessions to the customer, which would be applicable to uninsured patients in a provider setting
18Revenue Recognition Project: Provider Specific Considerations Revenue transactions involving multiple contractual relationshipsMany different parties may be associated with a revenue transaction involving a hospitalThe “customer” is the patientThird-party payor makes payment on the patient’s behalf; it is not a separate “contract with a customer”Many implementation issues will likely arise. Two issues identified as having potential significant impact on providers are:Accounting for uninsured patientsEstimating variable consideration from governmental payors
19Revenue Recognition Project: Provider Specific Considerations Issue #1: How are services performed from uninsured patients accounted for? See sections through 105Provider evaluates the patient’s intent and ability to payEstimate of variable consideration based on collection history of patients in the customer class (i.e. discounts and price concessions)The amount estimated to be uncollectible from uninsured patients is considered a price concessionGross charges of $10,000 but only expect to receive $1,000 recognize $1,000 of revenue assuming other criteria under are met
20Financial Reporting - Presentation of Bad Debts Under current practice, ASU requires some healthcare providers to present bad debt as a deduction from patient service revenueUnder the new standard, bad debts will be presented as an operating expense
21Revenue Recognition Project: Provider Specific Considerations Issue #2: How should providers estimate variable consideration from arrangements from governmental payors?Determination of the transaction price for third-party settlementsMedicare/Medicaid cost report settlementsRAC accrualsRisk adjustments for Prepaid Health plans
22Revenue Recognition Project: Provider Specific Considerations Issue #2 (cont’d):How does the use of expected amount/most likely amount ( ) differ from today’s “best estimate”?Use method which entity expects to better predict the amount of consideration to which it will be entitledUse of Expected Value (probability-weighted amount)Use of Most Likely Amount (single most likely amount in a range of possible considerations)
23Other Healthcare Issues identified Identifying the performance obligation and recognition of refundable and non-refundable entrance fees for CCRC’sPrepaid Health ServicesAccountable Care OrganizationsContract acquisition costs
24FASB ProjectsNot-for-profit Financial Reporting Model
25NFP financial reporting project GoalsBetter align activity in operating and cash flow statementsBetter align reporting between NFP HCOs and other NFPsStatement of Operations categoriesStatement of Cash Flows categoriesBusiness and charitable activitiesOperating activitiesInvesting activitiesNonoperating activitiesFinancing activities
26Financial Performance: Operating Measure Defined a required intermediate operating measure for all NFPs—based on two dimensions:Mission (Business & Charitable Activity): based on whether resources are from or directed at carrying out an NFP’s purpose for existence (vs. investing and financing)Availability: based on whether resources are available for current period activities and reflecting limits of both:-external donor-imposed limitations and-internal actions of an NFP’s governing boardPresentation of Transfers, to depict internal actions:Separate section within operating measure, after revenue and expense subtotalIncludes gifts of/ for capital items when placed in service
27Operating MeasureNFP business-oriented health care entities no longer required to present the performance indicatorRemove req. that if an operating measure is presented, then the change in unrestricted net assets must be shown (ASC )
28Net Assets + Current GAAP Proposed GAAP Disclosures UnrestrictedTemp. RestrictedPerm. RestrictedCurrent GAAPProposed GAAPWithout Donor RestrictionsWith Donor Restrictions+Amount and purpose of board designationsNature and amount of donor restrictionsDisclosures“Underwater” EndowmentsRevised net asset classification: Reflected in net assets with donor restrictions rather than in net assets without donor restrictionsEnhanced disclosure in addition to current GAAP
29Proposed new performance statement The basic frameworkWithout Donor RestrictionsWith Donor RestrictionsBusiness and charitable activities (operating)Operating revenuesXXXOperating expensesRevenues in excess of expensesTransfers in/(out)New performance (operating)measureNonoperating activities (financing/investing/other)Interest expenseInvestment returnOCI itemsTransfers in/out(XXX)Change in net assets
31Reporting of Investment Expenses How to present?Net presentation of investment expenses against investment return on the face of the statement of activitiesNetting limited to external and direct internal expensesWhat to disclose?Disclosure of investment expenses no longer required, except for the disclosure of the amount of internal salaries and benefits that have been netted (if any) against investment return
32Investment returnToday’s modelProposed new model
34Contributions for PP&E Without Donor RestrictionsWith Donor RestrictionsBusiness and charitable activities(operating)Cash gifts restricted for PP&E$$Release of restriction100(100)Gift of building to be used in operations90Revenues in excess of expensesXXXTransfers:Gifts of/for long-lived assets(190)New performance (operating)measureNonoperating (financing/investing/other)190Change in net assetsIf instead, NPO planned to sell the building (e.g. to obtain cash for investment), no transfer to nonoperating would be made
35Other Transfers Business and charitable activities (operating) Unrestricted contributionsxxxRelease of restrictionRevenues in excess of expensesTransfers in (out):Board-designated for quasi-endowment(XX)Spending rate on endowmentXXXNew performance (operating) measureNonoperating (financing/investing/other)XX(XXX)Change in net assetsOperating:contributions that are available for current spendingTransfers:used to reflect impact of governing board designations
36Financial Performance: Cash Flow Statement Require Direct Method for operating cash flows - Indirect method no longer permittedRe-categorize certain items to better align “operating” with activities statement and operating measurePurchases and proceeds on sales of PP&ECash restricted for PP&ECash from interest and dividendsInterest paid on long-term debt
37Cash Flow Statement Cash Flows from Operating Activities Cash received from service recipientsCash received from donorsCash paid to employeesCash paid to vendorsPurchase of property and equipmentProceeds on sale of property and equipmentContributions restricted for property and equipmentNet cash from operating activitiesCash Flows from Investing ActivitiesCash received from interest and dividendsPurchase of investment assetsProceeds from sale of investmentsNet cash from investing activitiesCash Flows from Financing ActivitiesPayments of principal on long-term debtInterest paid on long-term debtContributions restricted for endowmentNet cash from financing activitiesNet increase in cashCash at the beginning of yearCash at end of year
38*Either (or both) on face of Statement of Activities Reporting of ExpensesFUNCTION*Not functionalizedProgram ActivitiesSupporting ActivitiesTotal Operating ExpensesNon- OperatingTotal ExpensesProgram AProgram BM&GFundraisingSalaries & BenefitsGrants to OthersEquipment Rental & MaintenanceOccupancy CostDepreciationInformation TechnologyProfessional Service FeesSuppliesTravelPrinting & PublicationInterestOtherTotalNATURE*Qualitative disclosure on cost allocation among program and support functions requiredAlso, will provide better guidance on ‘Management and general’ activities*Either (or both) on face of Statement of Activities
39Liquidity Availability Liquidity Quantitative information about: The Board decided that an entity should define the time horizon it uses to manage its liquidity (for example, 30, 60, or 90 days) and disclose the following information:Asset type / debt maturityDonor / other external restrictions and internal limitsLiquidityAvailabilityQuantitative information about:The total amount of financial assetsAmounts that are not available to meet cash needs within the time horizon because of (1) external limits and (2) internal actions of a governing boardThe total amount of financial liabilities that are due within that time horizon.Qualitative information about how the entity manages its liquidity. For example, an entity might disclose:Its strategy for addressing entity-wide risks that may affect liquidity, including its use of lines of creditIts policy for establishing liquidity reservesIts basis for determining the time horizon used for managing liquidity
40NFP Financial Statements: Next Steps Exposure Draft (ED)—proposed ASU exposed for comments (estimated: Q1 2015)Board to have final cost-benefit discussion prior to issuanceComment period (Q1-Q2 2015): more outreach, field visits/ workshops, roundtables, etc.Begin redeliberations in Q3 2015
42Background-HIPAAHealth Insurance Portability & Accountability Act of 1996 (HIPPA)Governs the access, use, and disclosure of protected health information by covered entitiesCovered entity:health plan,health care clearinghouse,or a health care provider who transmits any health information in electronic form in connection with a transaction covered by HIPAA
43Background-HIPAAProtected Health Information (“PHI”): Individually identifiable health information that is transmitted or maintained in any form or medium.Individually Identifiable Health Information: Information, including demographic information, created or received by a health care provider, health plan, employer, or health care clearinghouse that can be used to identify an individual and that relates to the person’s health care.
44Background-HITECHHealth Information Technology for Economic and Clinical Health Act (HITECH),Enacted as part of the American Recovery and Reinvestment Act of 2009 (“Stimulus Bill”), P.LAmends HIPAA to impose significant new duties on covered entities and business associates to notify patients, the Federal Government, and the media of breaches of unsecured PHIRequires breach investigation and notificationIncreased penalties and sanctions
45Business AssociateBusiness Associate: third-party (not an employee of the covered entity) that performs or assists in performing a function or activity involving the use or disclosure of PHIVendorsService providers (billing, tech support)Accounting firms, law firms
46Business Associate Agreements Health plans and providers are required to enter into business associate agreements (“BAAs”) with business associatesBAAs impose on the business associate similar obligations to those on the health plan or providerEither party to a BAA must take action if aware that the other party has violated confidentialityBusiness associates now have affirmative duty to notify covered entities of breaches of unsecured PHI and to take steps to prevent and mitigate breaches.Business associates can be directly liable for breaches and are subject to the same penalties as covered entities.
48New RP-2014 Mortality Tables Released The Society of Actuaries released new RP-2014 mortality tables in October 2014.These new mortality tables should be used in estimating pension and other obligations with measurement dates of October 2014 and forward.Tables reflect an increase in life expectancy so obligations are expected to increase.Management should discuss the new mortality tables with plan actuaries that they plan to rely on as specialists.
50Common Practice Issues: RAC Audits Question: Is it appropriate for an HCO to record a revenue reserve at the date the services are rendered for Medicare revenue that it believes CMS will “take back” as a result of future adjustments and/or findings?HCOs should make a reasonable estimate of the amounts it expects to receive from third-party payers and such estimates shall be recorded in the period that the related services are renderedASC states “Estimates of contractual adjustments, other adjustments, and the allowance for uncollectibles shall be reported in the period during which the services are provided even though the actual amounts may become known at a later date.
51Common Practice Issues: RAC Audits There is significant diversity in practice on how healthcare entities are estimating and recording recoveries for claims under appeal.When an entity receives notification from CMS of the payment reduction it indicates that the revenue criteria may not been met…so the company must evaluate whether this isa change in estimate, ora correction of a prior period error.
52Common Practice Issues: RAC Audits If this is considered to be a change in estimate thenan accrual for RAC adjustment should be recordedthis is generally a contra revenue adjustment along with the set up of a corresponding liabilityThere is a diversity of practice on when to record a receivable for recoveries on appealed claims.There are two alternate views on this topic…
53Common Practice Issues: RAC Audits View 1:This view is based on ASC , Contingencies.Since it is not certain that the provider’s appeal will be successful, no receivable or related gain should be recorded until the appeals process is complete.
54Common Practice Issues: RAC Audits View 2:This view is based on SOP 00-1,“Auditing Health Care Third-Party Revenues and Related Receivables,” which states that “The fact that information related to the effects of future program audits, administrative reviews, regulatory investigations, or other actions does not exist does not lead to a conclusion that the evidence supporting management's assertions is not sufficient to support management's estimates”.Under this view, estimating recoveries for the successful appeal of denied RAC claims would be appropriate.
55Common Practice Issues: RAC Audits However, this estimate should be based on provider specific facts and circumstances and the success rate of the organization during prior appeals process related to similar claims.While industry data can (i.e. AHA, RACTRAC) be used to corroborate company estimates, many believe that can’t be the sole support for recording claims recoveries.Some firm’s have taken the position that View 1 is the only acceptable response in absence of provider specific data as described above so need to discuss with your auditor early in the estimation process.
56Program Integrity Audits (Cont’d) Recovery Audit Contractors (RACs)Recent CMS 68% Settlement OfferAll outstanding appeals of denied short-term IP staysHospitals had 14 days to submit final list of claims and signed Administrative Agreement after acceptingDeadline to accept was 10/31/14
57Common Practice Issues: RAC Audits For more information on this topic, please refer to the HFMA white paper at:
59Accounting for Costs Incurred During Implementation of ICD-10 Effective DateICD-10 implementation deadline of 10/1/14 10/1/15ImpactCosts incurred are either capitalized or expensed:Business process re-engineering - Expense as incurredEducation and training of coders, clinicians, and business office personnel - Expense as incurredProject consultants - Capitalize/expense as appropriateAllocate contract price to project components based on relative fair values, then treat accordinglyModification and replacement of billing and medical records information systems - Capitalize/expense as appropriate
60Accounting for Costs Incurred During Implementation of ICD-10 ImpactModification and replacement of billing and medical records information systems:Property and equipment – Capitalize based on capitalization policyAllocate maintenance/service costs and report separate from fixed assetsSoftware development and modificationOnly upgrades and enhancements that result in additional functionality can be capitalizedPreliminary project stage – Expense as incurredApplication development stage - Capitalize/expense using internal-use software guidancePost implementation-operation stage – Expense as incurred
61ASC 720-45-55 Illustration Internal-Use Software Implementation Costs Legend:a - Expense as incurred per ASCb - Expense as incurred per ASCc - Capitalize per ASC
62ASUContinuing Care Retirement Communities – Refundable Advance Fees
63Otherwise amounts would be classified as a refundable fee liability. ASU : Health Care Entities, Continuing Care Retirement Communities – Refundable Advance FeesContinuing care retirement communities should classify advance fees as deferred revenue only whenA resident contract provides that a portion of the advance fee is refundable upon re-occupancy by a subsequent residentThe refund is limited to the proceeds from the new occupant, andLegal and management policy and practice support the withholding of refunds under this condition.Otherwise amounts would be classified as a refundable fee liability.Reported as cumulative effect adjustment to beginning net assets or retained earnings of the earliest year presented.
64ASU 2012-01: Health Care Entities, Continuing Care Retirement Communities – Refundable Advance Fees Effective DateFor public entities, effective fiscal periods beginning after December 15, 2012If your organization has publicly traded debt or conduit debt, you would be considered a public entity for reporting purposes.For example, tax exempt bonds issued through an issuing authority would be conduit debt.For non-public entities, fiscal periods beginning after December 15, 2013.Retrospective application to all prior periods presented upon the date of adoption is permitted.
65ASUClassification of the Statement of the Sale Proceeds of Donated Financial Assets in the Statement of Cash Flows
66ASU : Not-for-Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of Cash FlowsAffects entities within the scope of ASC 958 that accept donated financial entitiesNot-for-profit entities receive donations in many forms, including various types of financial assets (e.g., equity and debt securities, partnership interests). Many NFPs have policies requiring that donated financial assets be sold shortly after being received from the donor
67ASU : Not-for-Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of Cash FlowsA not-for-profit entity should classify the sale of donated securities that are directed to be sold upon receipt in the near-immediate future and that can be sold in the near-immediate future as operating activities in the statement of cash flowsHowever, if the donor restricted the use of the contributed resources to long-term purpose, then those cash receipts should be classified as cash flows from financing activities
68ASU : Not-for-Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of Cash FlowsEffective DateEffective prospectively for fiscal years, and interim periods within those years, beginning after June 15, 2013Retrospective application to all prior periods presented upon the date of adoption is permitted
69ASUObligations Resulting from Joint and Several Liability Arrangements
70Additional required disclosures ASU : Liabilities, Obligations Resulting from Joint and Several Liability ArrangementsAffects entities that are jointly and severally liable with other entitiesThe ASU requires entities to “measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the following:The amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligorsAny additional amount the reporting entity expects to pay on behalf of its co-obligorsAdditional required disclosures
71ASU 2013-04: Liabilities, Obligations Resulting from Joint and Several Liability Arrangements Effective DateFor public entities, effective for fiscal years beginning after December 31, 2013 (and interim reporting periods within those years)For nonpublic entities, effective for the first annual period ending on or after December 15, 2014 and interim and annual reporting periods thereafterThe ASU should be applied retrospectively to obligations with joint-and-several liabilities existing at the beginning of an entity’s fiscal year of adoption.Entities that elect to use hindsight in measuring their obligations during the comparative periods must disclose that factEarly adoption is permitted
72ASUServices Received from Personnel of an Affiliate
73ASU 2013-06: Not-for-Profit Entities, Services Received from Personnel of an Affiliate Affects not-for-profit entities, including not-for profit, business-oriented health care entities, that receive services from personnel of an affiliate that directly benefit the recipient not-for-profit entity and for which the affiliate does not charge the recipient not-for-profit entity.ASU requires a recipient not-for-profit entity to recognize all services received from personnel of an affiliate that directly benefit the recipient not-for-profit entity.Services should be measured at the cost recognized by the affiliate for the personnel providing those services. In certain instances it may not be appropriate to measure at cost, and the recipient not-for-profit entity may elect to recognize the service received at either (1) the cost recognized by the affiliate for the personnel providing that service or (2) the fair value of that service.
74ASU 2013-06: Not-for-Profit Entities, Services Received from Personnel of an Affiliate Effective dateEffective prospectively for fiscal years beginning after June 15, 2014, and interim and annual periods thereafterA recipient not-for-profit entity may apply the amendments by using a modified retrospective approach under which all prior periods presented on the adoption date should be adjusted but no adjustment should be made to the beginning balance of net assets for the earliest period presentedEarly adoption is permitted
76ASU 2014-17: Business Combinations – Pushdown Accounting Previously no guidance for non SEC registrants and current U.S. GAAP offered limited guidance when and how pushdown accounting should be appliedNew ASU provides option to apply pushdown accounting when acquirer (defined in Topic 805) obtains control of reporting entityEffective on November 18, 2014
77ASU 2014-17: Business Combinations – Pushdown Accounting Scope – Applies to the separate financial statements of an acquired entity and its subsidiaries that are a business or non-profit activity (either public or non-public) in which an acquirer obtains control of the acquired entityMain Provisions ---Acquired entity may elect the option to apply pushdown accounting in the reporting period when the change-in-control event occurredAcquired entity may elect the option to apply pushdown accounting in a subsequent reporting period (this will be treated as a change in accounting principle in accordance with Topic 250)
78ASU 2014-17: Business Combinations – Pushdown Accounting An acquirer can obtain control in a variety of ways:transferring cash or other assetsincurring liabilitiesissuing equity interestsproviding more than one type of considerationW/O transferring consideration, including by contract alone
79ASU 2014-17: Business Combinations – Pushdown Accounting If an acquiree elects the option to apply pushdown accountingReflect in its separate FS the new basis of accounting established by the acquirer for the individual assets and liabilitiesShall recognize goodwill that arises because of pushdown accountingBargain purchase gains recognized by the acquirer shall not be recognized in the income statement of the acquireeThe bargain purchase gain shall be recognized as an adjustment to APIC or net assets for a non-profit
80ASU 2014-17: Business Combinations – Pushdown Accounting Disclosures:The name and a description of the acquirerHow they obtained controlAcquisition dateAcquisition-date FV of the total considerationAmounts recognized by the acquiree for each major class of assets and liabilitiesQualitative description of the factors that make up goodwill recognized and intangible assets that do not qualify for separate recognitionInfo to evaluate the financial effects of the adjustments