An employer should recognize a liability and expense for voluntary termination benefits, in financial statements prepared on the
accrual basis of accounting, when the employees accept the offer and the amounts can be estimated.
Generally, when reporting income on the
accrual basis the right to receive income determines when an amount is included in gross income, not the timing of the cash receipt (Enright, SCt, 41-1 USTC para.
* a government can continue to report such operations in governmental funds for financial reporting purposes, while at the same time collecting whatever additional information is needed to convert the data to an
accrual basis for FCA purposes.
If a corporation is on the
accrual basis and has properly accrued a rental deduction before year-end to its sole shareholder-lessor (or officer-shareholder), the constructive-receipt doctrine would require the shareholder to include the rental income in the year of the corporation's accrual; the corporation would be allowed a deduction in the accrual year.
Accrual basis accounting became common and, as a result, reporting issues became a top priority for the profession.
However, the ruling did not address the issue of a transferee on the
accrual basis. If the amount of payables to be transferred is significant, this uncertainty as to future deductibility might warrant a ruling request.
In it, the IRS outlines circumstances under which it will give certain small business taxpayers automatic consent to change their method of accounting from the
accrual basis to cash.
15 Current expenditures,
accrual basis 1,118.8 1,118.9
The OID on both taxable and tax-exempt bonds must be amortized on an
accrual basis.
Each is to be reported with a flow-of-economic-resources measurement focus and the
accrual basis of accounting.
* An
accrual basis manufacturer promised to pay retailers a cash rebate if they advertised a discounted product by yearend.
