Proposal to Repeal and Replace Obama Care

House Republican introduced proposal to repeal and replace the Patient Protect and Affordable Care Act (commonly known as “Obama Care”) Monday evening and the proposal is scheduled to be routed to the House Ways and Means Committee for mark up.  Some of the significant changes included in the proposal is summarized below:

• Removal of penalties under IRC section 5000A for failure to have health insurance effective December 31, 2015.

• Removal of penalties under IRC section 4980H for failure to provide minimum essential coverage to employees by large employers effective December 31, 2015.

• Removal of current premium tax credit and introduction of a new Age-Based health insurance coverage credit. The credit amount ranges from $2,000 to $4,000 per year and per person (with a limitation of $14,000 for a household with five or more members).  The credit would be subject to phase-out provision for taxpayers with modified adjusted gross income over $75,000 ($150,000 for married filing joint returns).

• Removal of the 3.8% net investment income tax and the 0.9% Medicaid surtax effective December 31, 2017.

• Removal of the section 162(m)(6) $500,000 compensation deduction limitation for health insurance providers.

• Removal of the medical device excise tax effective December 31, 2017.

• Revert from 10% to 7.5% income threshold for itemized deduction for medical expenses.

As the Republicans control both houses of Congress, many of the provisions included in the proposal is expected to be enacted.

Please refer to the link below for additional information.

http://healthaffairs.org/blog/2017/03/07/examining-the-house-republican-aca-repeal-and-replace-legislation/

리스 회계기준 업데이트 공표

미국회계기준(US GAAP)과 국제회계기준(IFRS)이 새로운 리스 기준을 도입함에 따라, 회사들의 재무제표에 변화가 발생하게 된다. 미국회계기준 업데이트 “ASU 2016-02”에 의하면 새로운 기준은 상장기업들의 경우에는  2018년 12월 15일 이후부터이며 적용되며, 그 외의 사업체들은 2019년 12월 15일 이후부터 적용되어진다. 반면, 국제회계기준 IFRS 16에 따르면 상장회사와 비상장회사 모두 2019년 1월 1일 이후에 시작하는 회계연도부터 적용된다. 미국회계기준과 국제회계기준 모두 조기적용이 가능하다.

국제회계기준에 따라 재무제표를 발행하는 외국기업들을 모회사로 두고 있는 미국기업의 경우, 본사와 같은 회계기준을 사용하여야 하므로, 현지에 있는 경영진들은 이행준비에 관심을 가지고 본사와 함께 시행시기 및 절차에 대하여 미리 조율해야 할 것이다. 본사가 2019년 1월 1일 이후부터 관련 회계기준을 사용하게 된다면, 마찬가지로 미국기업도 이에 따라서 변경된 회계기준을 사용하여 비교 재무제표를 준비하여야 한다. 즉, 본사에서 2019년 1분기 재무제표를 준비하기 위해서 본사와 본사에 연결되는 자회사들은 새로운 회계기준을 사용하여 2019년1분기와 2018년 1분기 재무제표를 준비하여야 한다. 이를 위해서 2019년도 1분기가 되기 이전에 새로운 회계기준에 대한 2018년도 전반적인 영향에 대해 분석이 되어야 한다.

이번 리스회계개정안은 국제회계기준위원회(IAS)와 미국회계기준위원회(FASB)가 함께 공동으로 시작하였으며, 미국회계기준 업데이트 "ASU 2016-02"의 많은 내용들이 "IFRS 16"과 일치한다. 이 두가지 기준들의 주요한 차이점은 미국회계기준위원회는 ‘Dual model lease classification approach’를 적용한 반면, 국제회계기준위원회는 ‘Single model approach’를 적용한 것이다.

이번에 개정되는 회계기준에 대비하여 기업들은 기존 임대계약서를 검토하여 임대를 통한 자산과 부채의 가치를 정확히 산정한 후, 이로인해 미치는 회계상에서의 영향 등을 미리 점검해보아야 한다. 개정된 리스회계기준은 가치산정으로 변경된 임대자산과 부채를 대차대조표(Balance sheet)에 기재하도록 요구하기 때문에, 많은 기업들이 이번에 개정된 기준을 따르게되면 일반적인 회계 및 재무보고뿐 아니라 내부 감사, IT, 세금, 예산, 교육, 계약, 규정, 계약관리 및 보다 넓은 분야에서 광범위하게 영향을 받게될것이다.

또한 이번 개정안은 이연법인세에도 큰 영향을 주게 되므로, 효과적이고 시기적절한 계획을 세우기위하여 신속한 평가가 이루어 져야 한다.

To see English version of this article, go to: http://www.kyjcpa.com/news-updates/lease-accounting/

Lease Accounting

Both US GAAP and IFRS substantially changed how leases are accounted for, and the new standard will affect all companies that lease assets such as real estate, manufacturing equipment, and vehicles.  The effective date of the new standard under the US GAAP is period beginning after December 15, 2018 for public business entities (and period beginning after December 15, 2019 for all other entities).  An early adoption is permitted.  The effective date under the IFRS is period beginning on or after January 1, 2019.  An early adoption is also permitted.

US subsidiaries of foreign companies issuing financial statement under IFRS MUST implement the new standard concurrently with their parent companies.  Accordingly, the local management should coordinate with the parent companies regarding the implementation process and timing.  Entities are required to adopt the new standard using a modified retrospective transition approach, which requires application of the new guidance at the beginning of the earliest comparative period presented in the year of adoption (i.e. require a restatement of comparatives with the cumulative impact adjusting the beginning of the retained earnings).

The leases project began as a joint project with the IASB, and many of the requirements in Topic 842 of US GAAP are the same as the requirements in IFRS 16.  A key difference between the two standards is that FABS adopted dual model lease classification approach while the IASB adopted a single model approach.

The implementation requires review of all existing lease contracts, classification, measurement of liabilities and assets, and the adoption impact needs to be remeasured.  The implementation will be time consuming and requires advance plan.  The new lease accounting standard requires organizations to recognize most leases on-balance sheet, which increases their reported assets and liabilities. For many companies, implementation of the new leasing standard will have broad organizational impacts beyond general accounting and financial reporting, including areas such as treasury, internal audit, IT, tax, budgeting, training, regulatory, contract management, and forecasting.

Note that the new standard will also have a significant impact to deferred tax position.  A prompt assessment should be performed now to develop an efficient and timely implementation plan.

KYJ LLP advisors are ready to assist you with lease accounting change and adoption of the standard.

Click here to view full ASU 2016-02 Topic 842 from FASB or go to FASB website to view the full publication.

To see Korean version of this article, go to: http://www.kyjcpa.com/news-updates/lease-accounting-korean/

Measurement-Period Adjustment

FASB substantially simplified the accounting for measurement-period adjustment relates to a business combination.  The amendment was issued back in September 2015 (See ASU No. 2015-16) but not many people paid much attention to it because of its effective date not being immediate.  The effective date for public entities is periods beginning after December 15, 2016.  For all other entities, the effective date is periods beginning after December 15, 2017.  However, early adoption is permitted.

Here is a quick overview of the amendment.

In the year of a business acquisition, the acquirer must identify and measure all aspects of business combination (e.g. working capital, intangibles, goodwill, contingencies, uncertain tax positions, etc.).  More often than not, the acquire must reflect certain provisional amounts based on information available at the acquisition date and additional information become available during the “measurement-period” which may result in adjustments to assets and liabilities identified and measured initially.   The measurement-period is period of time during which additional acquisition accounting information becomes available subsequent to the date of acquisition but exceeding one year from the date of the acquisition.

Under the current rule, the measurement-period adjustments must be recognized retrospectively.  In other words, the acquirer must revise comparative information on the income statement and balance sheet as if the information resulting in adjustments were available at the acquisition date.  This involves restating comparative balance sheet and P&L items.

Under the new rule, the measurement-period adjustments must be recognized prospectively.  In other words, the acquirer must recognize measurement-period adjustments in the periods in which the adjustment is identified and measured.

Please note that material adjustments identified post measurement-period (i.e. adjustments determined beyond the one year from the acquisition date) may result in a RESTATEMENT if they are not resulting from changes in facts and circumstances.

Click here to view full ASU 2015-16 from FASB or go to FASB website to view the full publication.