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Maemura & Co. CPA’s LLP

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January 6, 2021

Judgement guidance for CPA to navigate pandemic-related challenges

Lease Concessions

         • Lessor or lessee can elect to apply or not apply guidance to contract

*Refer to recent FASB Q&A https://www.fasb.org/cs/Satellite?cid=1176174459740&pagename=FASB%2FFASBContent_C%2FGeneralContentDisplay

PPP Borrower Accounting

         • Nongovernment entities may account for PPP loan as financial liability with Topic 470 and Subtopic 835-30

         • Does not impute additional interest

         • Loan considered no longer a liability when one of two criteria is met:

         1. Entity is legally released from being primary obligor under the liability,

         2. Entity pays off loan to lender/

*Refer to recent AICPA Q&A https://www.aicpa.org/interestareas/frc/recentlyissuedtechnicalquestionsandanswers.html

Lender Accounting

         •        Individual or group or financial institution gives funds for repaid funds

         1. Loan restructuring resulting in periods with reduced payments

                   – “Restructured” means NOT considered trouble debt or new loan

                   – creditor determines new effective interest rate

         2. Payments received from SBA accounted for payment received from borrower.

         3. Classification of Advances accounted as loan

         4. SBA guarantees also called “embedded guarantees”*Refer to recent AICPA https://www.aicpa.org/interestareas/frc/recentlyissuedtechnicalquestionsandanswers.html

by MAEMURA STAFF

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