Accounting for short-term contracts: it's not so simple
Article Abstract:
Statement of Standard Accounting Practice (SSAP) 9 was revised to solve the discrepancy between the original standard and the Companies Act of 1985 in the area of the treatment of long-term contract balances on balance sheets. SSAP 9 revises balance sheet disclosure requirements and redefines "long-term contract" as a contract falling into different accounting periods rather than one of a 12-month length. SSAP 9 also rules on the accrual of profit on short-term contracts remains controversial. SSAP 9 requires material contracts with a duration shorter than 12 months to be accounted for as long-term. To solve this dilemma, accountants should account for all contracts on the percentage of completion basis. If the effect is immaterial, the completed contact method should be used. Accountants should change accounting policy in the year they implement revised SSAP 9, restate the opening balance of in-progress short-term contracts, and account for contracts on the completed basis.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1989
User Contributions:
Comment about this article or add new information about this topic:
Accounting for goodwill: return from amnesia
Article Abstract:
The Accounting Standards Committee's Exposure Draft (ED) 47, 'Accounting for Goodwill', is based on unsupportable hypotheses and resorts to pragmatism to support its conclusions. Measuring goodwill is rife with difficulties, and ED 47 offers little advice on how to separate the component elements of goodwill or on how to attribute the amortization periods to the elements of goodwill. The Committee has done a 180 degree turn in which the preferred method in the Statement of Standard Accounting Practice issued in 1984 is rejected and the one only reluctantly accepted is elevated to sacrosanct status, seemingly only to bring the UK in line with International Accounting Standards which are modelled after US accounting standards.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1990
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Accounting for the effects of changing prices. Accounting for pensions costs: transitional provisions
- Abstracts: Do building societies have a future? Banks and building societies: coming into line. Your interest at heart?
- Abstracts: Worker misclassification affects more than FICA. Cost increases for misclassifying a worker as an independent contractor
- Abstracts: Intent to compensate for personal services is a necessary component for deductibility. Payments for sickness and injury are not always excludable from taxpayer's income
- Abstracts: A tax incentive for profit sharing. Beware of strange gifts late at night