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Financial Reporting
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Loyalty Points Are a Liability, Not Revenue: How to Book Breakage and Deferred Revenue Under ASC 606
Under ASC 606, loyalty points are a deferred revenue liability until customers redeem them or you can prove breakage — Starbucks booked $200.4M in breakage revenue in FY2025 this way. This guide covers the journal entries for issuance and redemption, the 12-month data requirement for breakage estimates, and the rollforward schedule that keeps a rewards program auditable.
PCAOB Bars Zwick CPA Over Fabricated Genie Energy Workpapers: What Audit Quality Failures Mean for Small Businesses
The PCAOB revoked Zwick CPA's registration and fined the firm $50,000 after finding its 2022 Genie Energy audit relied on the predecessor auditor's recycled workpapers with swapped names and fabricated documentation. With 61% aggregate deficiency rates at triennially inspected firms, here's how small businesses can vet the audits they rely on — and keep their own books diligence-ready.
FASB Settles How to Account for Factored Receivables Billed Before the Work Is Done: ASU 2025-12 Issue 20 and ASC 860
FASB's ASU 2025-12 (Issue 20) clarifies that receivables recognized before performance is complete — annual SaaS billed upfront, retainers, construction progress billings — fall under ASC 860's transfer rules when sold or factored, not ASC 470 debt guidance by default. The fix takes effect for annual periods beginning after December 15, 2026, with issue-by-issue early adoption, and sale treatment still requires passing the true-sale test.
ASC 606 for Indie App Developers: Should You Record App Store Revenue Gross or Net?
Most indie developers are principals under ASC 606's principal-versus-agent test, so a $9.99 App Store sale is $9.99 of revenue plus a $3.00 platform-fee cost of sales — not a $6.99 net deposit. Here's the three-indicator control test, current Apple and Google fee tiers, and the exact journal entries to book it correctly.
How to Read an Accounts Receivable Aging Report: 30/60/90-Day Buckets Explained
An AR aging report sorts unpaid invoices into current, 1–30, 31–60, 61–90, and 90+ day buckets so you can spot cash flow risk early. Healthy businesses keep 70–80% of receivables in the first two buckets; collection odds drop below 70% past 90 days. Here's how to read the buckets, run a weekly collections workflow, and turn the report into a cash forecast.
FASB ASU 2025-12: The APIC-Only Method for Retiring Shares in a Co-Founder Buyout
FASB's ASU 2025-12 (Issue 10) codifies a third method for retiring repurchased shares — charging the full excess over par value to additional paid-in capital, as long as APIC stays non-negative. Here is how the APIC-only, retained-earnings-only, and allocation methods change the balance-sheet impact of a co-founder buyout, and why the choice matters for loan covenants and dividend capacity before the December 15, 2026 effective date.
FASB ASU 2026-01: How Startups Must Now Measure PIK Dividends on Preferred Stock
FASB's ASU 2026-01 requires PIK dividends on equity-classified preferred stock to be measured at the stated contractual rate — not fair value — effective for annual periods beginning after December 15, 2026, with early adoption permitted. Here's what venture-backed startups with PIK preferred provisions should do before their next audit.
FASB's New Environmental Credits Standard (ASU 2026-02): What Topic 818 Means for Carbon Credits, RECs, and RINs
FASB's ASU 2026-02 creates Topic 818, the first GAAP framework for environmental credits, splitting carbon offsets, RECs, and RINs into compliance, noncompliance, and voluntary categories with different measurement rules, effective for public companies in fiscal 2028 and private companies in fiscal 2029.
House Cleaning Franchise Bookkeeping: How to Track Royalty Fees, Ad Funds, and Multi-Territory P&Ls
Cleaning franchise royalty (4–8%) and ad fund (1–3%) fees are calculated on gross sales — before discounts and comp cleans — and the total franchise fee load commonly runs 12–15% of revenue. Here's how to book royalties, brand fund contributions, and per-territory P&Ls correctly, with a worked $95,000/month reconciliation example.
PCAOB Opens First-Ever Public Comment on Its Standard-Setting Agenda: What to Know Before August 7, 2026
The PCAOB opened its first-ever public comment period on its standard-setting and research agenda on June 23, 2026, with comments due August 7, 2026 on focus areas, its general approach, and the SEC's semiannual reporting proposal.
FASB ASU 2025-06: How the New Internal-Use Software Capitalization Rule Fits Agile Development
FASB's ASU 2025-06 replaces the three-stage ASC 350-40 test with a single "probable-to-complete" threshold for internal-use software, a change expected to decrease capitalization for SaaS companies once it takes effect for annual periods beginning after December 15, 2027.
Nonprofit Merger Accounting: What ASC 958-805 Requires Before You Sign
Under ASC 958-805, a combination of two nonprofits must be classified as either a merger, which uses the carryover method with no fair-value remeasurement or goodwill, or an acquisition, which requires fair-value remeasurement and an immediate expense instead of capitalized goodwill for any excess consideration.