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Spring 2014
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Construction and Real Estate Industry
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Because Harding, Shymanski & Company, P.S.C. is committed to providing quality service to our construction and real estate clients, we have selected a team of dedicated professionals to serve as your industry's consultants. These individuals understand the language and key issues unique to your industry and possess the drive and determination to help you manage your company on a proactive basis.
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Simplification for Goodwill and Interest Rate Swaps Coming Soon
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The Financial Accounting Standards Board (FASB) will soon be finalizing Accounting Standards Updates (ASU) related to the simplified hedge accounting approach for certain interest rate swaps and also subsequent accounting for goodwill for private companies. These ASUs will be effective for fiscal year beginning December 15, 2014 and any interim periods thereafter. There will also be an option for early adoption. If the ASUs are finalized prior to issuance of its year-end financial statements, a company could potentially apply the updates to its 2013 financial statements.
With the hedge accounting approach, private companies will assume no ineffectiveness for qualifying swaps. Entities will be allowed to elect this approach on a swap-by-swap basis for existing swaps and those entered into following adoption of the new principles. If the simplified hedge approach is adopted, private companies may elect to use settlement value rather than fair value of the swap. The goodwill alternative will allow for amortization up to ten years, as well as alternatives to the current rules on impairment testing.
Since each company has its own unique circumstances, private companies should consider how these changes will benefit their business.
For more information, contact Scott Olinger, CPA, CPIM at 800.880.7800 ext. 8466 or email solinger@hsccpa.com or Greg Elpers, CPA, CCA at 800.880.7800 ext. 1352 or email gelpers@hsccpa.com.
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| An Inside Look at the Construction Project Management Cycle |
The basics of project management build on one another throughout a project and make up what is known as the construction project management life cycle. Taken from nearly two decades of working with some of the most profitable and successful contractors and their PMs, this article identifies best practices within each phase of the project management life cycle - initiation (or pre-bid), project planning, controlling the project, executing the project, and closeout.
To read this article in its entirely, visit our website. Contact Gregory Elpers, CPA, CCA at gelpers@hsccpa.com for more information.
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| Research and Development Credit |
You may be thinking to yourself, "What types of expenditures qualify for this credit?" or "This credit does not apply to me." A common misconception regarding this credit is that you must employ scientists to qualify for it. Many businesses are unaware that the Research and Development Credit (R&D Credit) reaches across almost every industry, including construction. A substantial amount of time in the construction industry is spent developing designs and improving processes and technologies. These activities provide opportunities to take advantage of this credit.
Some examples of construction activities that qualify, but are not limited to, include:
- Design of electrical, HVAC, and plumbing systems
- Designing layouts for optimal performance, efficiency, reliability, safety, and quality
- "Green" building design initiatives
- Construction equipment development and improvement
Currently, there are two ways to calculate the credit: 1) a simplified credit which is 14% of qualified expenditures; or 2) a more complex credit which is 20% of the excess of qualified expenditures over the qualifying base year expenditures. The credit is nonrefundable and applies to all open tax years for both Federal and all applicable states.
The next question you may be asking is "Will the R&D Credit be extended?" The R&D Credit has been available for over 30 years but expired on December 31, 2013. This credit has expired eight times and has been extended 14 times. Therefore, it is no surprise that the expansion and extension of the credit is being discussed by Congress. The current proposed bill to extend and expand the R&D Credit would modify the calculation method and the rate for the tax credit for qualified research expenses. The modified credit would also be made permanent. Although we cannot predict the future, we would encourage businesses to continue to collect and maintain all the appropriate documentation to claim this credit.
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Disclaimer
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The information contained in this email is for general guidance on matters of interest only. The publication does not, and is not intended to provide legal, tax or accounting advice.
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Harding, Shymanski & Company, P.S.C. provides accounting, tax, and consulting services to our clients from offices in Evansville, Indiana, and Louisville, Kentucky.
Call us today! 800.880.7800
www.hsccpa.com
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