Accounting and Financial Disclosures for the Employee Retention Credit (ERC) and the Pass-Through Entity (PTE) Tax (Course Id 1939)

Accounting - Accounting for Course Id 1939

The objective of this course is to review the accounting and financial disclosures related to two recent changes from legislation: the Employee Retention Credit (ERC) and the Pass-Through Entity (PTE) Tax.

Topics include: An overview of the ERC rules; models to use to account for the ERC; comparing use of the ASC 958 model with the IAS 20 model to account for the ERC; disclosures required for the ERC including disclosures found in newly issued ASU 2021-10; fixing 2021 ERC presentation and disclosure errors; presenting the ERC on tax-basis financial statements; overview of the Pass-Through Entity (PTE) Tax election; GAAP accounting for the PTE tax; GAAP disclosures for the PTE tax; presenting the PTE tax on tax-basis financial statements, and more.

NASBA QAS - Text - Technical - NASBA Registry - 1939

Course Learning Objectives

• Recognize the type of expense that is the basis for measuring the amount of the Employee Retention Credit (ERC).
• Identify where to present the ERC in the statement of income using the ASC 958 conditional contribution model.
• Recognize where to present the ERC in the statement of income using the IAS 20 grant model.
• Identify an action step to be taken to correct the previous presentation and disclosure of an ERC in the 2020 statement of income.
• Recognize the proper presentation of the ERC in a tax-basis statement of income.
• Recognize a technique that has been attempted to circumvent the SALT deduction limitation.
• Identify how to account for the PTE tax in an entity’s financial statements.
• Recognize the requirements for recording deferred state income taxes with respect to the PTE tax election.
• Identify disclosures that should be made for the PTE tax election.

Chapter 1 - Accounting and Financial Disclosures for the Employee Retention Credit (ERC) and the Pass-Through Entity (PTE) Tax

I.  Introduction

II. Accounting - Financial Disclosures for the Employee Retention Credit (ERC)

A. Overview

B. GAAP Accounting for the ERC

C. OPTION 1: ASC 958-605- Not-for-Profit Entities: Revenue Recognition

D. OPTION 2: IAS 20, Accounting for Government Grants and Disclosure of Government Assistance

E. Disclosures for the ERC

F.  Fixing 2021 Comparative Financial Statements and Disclosures for the ETC

G. Tax-Basis Financial Statements and the ERC

Review Questions

III. Accounting - Financial Disclosures for the Pass-Through Entity (PTE) Tax

A. Overview

B. Use of the Pass-Through Entity (PTE) Tax Election

C. GAAP Accounting and Disclosures- PTE Tax

D. GAAP Accounting Rules for the PTE Tax

E. GAAP Disclosures for the PTE Tax

F.  PTE Tax and Tax-Basis Financial Statements

Review Questions

Glossary