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Preparing and Reporting Financial Statements on the Tax-Basis and Other Special Purpose Frameworks

Exam Questions: 50
Course Level: Basic
Pages: 336 | Content: 326, Supplemental: 10
NASBA Area of Study: Accounting and Auditing
Not Acceptable for: Enrolled Agents
Version: 8100

The objective of this course is to discuss the general rules and applications used in the preparation of and reporting on tax-basis financial statements and other bases of accounting found within the special purpose frameworks (also referred to as other comprehensive bases of accounting). Updated for changes made by the Tax Cuts and Jobs Act, the CARES Act, and the Consolidated Appropriations Act, topics include an overview of the types of special purpose frameworks, advantages and disadvantages of using tax-basis financial statements, tax-basis accrual versus cash-basis, reviewing the key differences between GAAP and tax-basis revenue and expenses and other differences, tax-basis disclosures, reporting options for tax-basis financial statements, unusual reporting and presentation issues related to tax-basis financial statements, an overview of other types of special purpose frameworks, including pure cash basis, modified cash basis, regulatory basis, contractual basis, and the other basis of accounting, and more. This course also addresses the presentation and disclosures for PPP loans, Employee Retention Credit (ERC), and the Pass-Through Entity (PTE) tax. PLEASE NOTE: This course qualifies for 5 Accounting hours and 5 Auditing hours. Not accepted for Enrolled Agents. All course material provided. No prerequisites. Course level: Basic.

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Course Information

Table of Contents
  • Overview
  • Scope of Tax-Basis Financial Statements
  • Advantages and Disadvantages of Tax Basis
  • Key Differences Between Tax Basis and GAAP
  • Financial Statement Formats
  • Tax-Basis Disclosures
  • Tax-Basis Reports
  • Converting to Tax-Basis Financial Statements
  • Unusual Practice Issues- Tax-Basis Financial Statements
  • Other Special Purpose Frameworks
Objectives
  • To identify an accounting standard that exempts nonpublic entities from its application
  • To recall a disadvantage of the AICPA's Financial Reporting Framework for SMEs
  • To recognize the type of criteria on which the other basis of accounting is based
  • To recall whether a one-member LLC is permitted to issue tax-basis financial statements
  • To identify the best use for tax-basis accrual financial statements
  • To recognize an example of a permanent difference
  • To recall an example of a GAAP disclosure that can be eliminated by using tax-basis financial statements
  • To identify a situation in which tax-basis financial statements might be misleading
  • To recall ways in which nontaxable revenues and nondeductible expenses can be presented in tax-basis financial statements
  • To recognize which type of exchange of assets no longer qualifies for like-kind treatment in tax-basis financial statements
  • To recall how to account for the installment sales method under GAAP as compared with tax-basis financial statements
  • To recognize how an entity accounts for a change in accounting method in the tax basis of accounting
  • To identify how to account for certain transactions in tax-basis financial statements
  • To recognize whether supplementary information is part of the financial statements
  • To identify titles that are appropriate and not appropriate for tax-basis financial statements
  • To recall types of legends that might be included on pages of tax-basis financial statements
  • To recall how a statement of cash flows should be accounted for and presented in tax-basis financial statements
  • To recognize the rules for presenting a statement of comprehensive income in tax-basis financial statements
  • To identify categories of disclosures that should be included in tax-basis financial statements
  • To recognize elements that are and are not relevant to tax-basis financial statements in preparing a summary of significant accounting policies
  • To recall how certain GAAP disclosures should be handled in tax-basis financial statements
  • To recall how to account for the pass-through entity (PTE) tax under tax-basis financial statements
  • To recognize the reporting requirement for preparation and compilation of tax-basis financial statements engagements under SSARS Nos. 21-25
  • To recall the appropriate title for a review report on tax-basis financial statements
  • To identify certain language that should be included in an audit report on tax-basis financial statements
  • To identify the reporting option when an entity changes from GAAP to tax-basis financial statements
  • To recognize how an accountant should report on a grantor trust or one-member LLC's tax-basis financial statements
  • To identify the disclosures that are required if an accountant issues a report on a tax return
  • To recall the rules to issue a compilation report on a tax return
  • To identify disclosures that are and are not relevant to cash-basis financial statements
  • To recognize an element that is included in a summary of significant accounting policies for the modified cash basis
  • To identify other types of special purpose frameworks other than tax basis

PLEASE NOTE: CPE credit measurement is based on NASBA Registry and QAS guidelines of one credit for every 50 minutes. Credit calculation may vary in different states — check with your State Board of Accountancy. Unless otherwise noted in the specific course description, no advanced preparation is required in order to register or complete any PES CPE course. Use of materials or services provided by Professional Education Services, LP ("PES") are governed by the Terms and Conditions stated on PES' website www.mypescpe.com. PES provides these courses with the understanding that it is not providing any accounting, legal, or other professional advice and assumes no liability whatsoever in connection with its use. PES has used diligent efforts to provide quality information and material to its customers, but does not warrant or guarantee the accuracy, timeliness, completeness, or currency of the information contained herein. Ultimately, the responsibility to comply with applicable legal requirements falls solely upon the individual licensee, not PES. PES encourages you to contact your state Board for the latest information and to confirm or clarify any questions or concerns you have regarding your duties or obligations as a licensed professional.