PwC's accounting podcast

We continue our revenue podcast miniseries discussing contract modifications. Contract modifications are accounted for as either a separate contract or as part of the existing contract, depending on the nature of the modification.In this episode, we discuss: 4:47 – An overview of contract modifications   5:57 – Modifications that are accounted for as separate contracts 6:54 – Modifications that are accounted for prospectively 10:08 – Modifications that result in cumulative catch-up adjustments 11:28 – Other types of modifications 13:16 – Common contract modification scenarios and related accounting pitfalls 23:22 – Contract terminations For more information, see section 2.9 of our Revenue guide. Also, check out other episodes in our miniseries: Gross versus net revenue: Is your company the principal or agent? and Identifying the contract – The first step in recognizing revenue. Additionally, follow this podcast on your favorite podcast app for more episodes.   Pat Durbin is a Deputy Chief Accountant in PwC’s National Office. He has over 30 years of experience consulting with our clients and engagement teams on complex accounting matters, including issues related to revenue, compensation, income taxes, and inventory under both US GAAP and IFRS. Angela Fergason is a partner and standard setting leader in PwC's National Office who specializes in accounting for revenue and employee compensation arrangements. She also consults on a range of financial reporting issues impacting technology companies. Heather Horn is the PwC National Office Sustainability & Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s quarterly webcast series. Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

This episode provides an overview of the new standard from the International Accounting Standards Board, the IASB. IFRS 18 is the new standard on presentation and disclosure in financial statements, with a focus on updates to the income statement. This is a significant development in IFRS financial reporting - even companies not reporting under IFRS will want to be aware of these updates. In this episode, we discuss:1:10 – An overview of the new standard5:00 – Aggregation and disaggregation (impacting all primary financial statements and notes)9:00 – Structural changes to the statement of profit or loss18:25 – Getting started with implementation and the timeline21:19 – Management-defined performance measuresFor more information, read our publication, IFRS 18 is here: redefining financial performance reporting. Additionally, follow this podcast on your favorite podcast app for more episodes.Gary Berchowitz is the non-financial instruments leader in PwC’s Global Assurance Quality - Corporate Reporting Services group. Gary brings years of financial accounting experience, working to drive quality and connectivity throughout the PwC network and help local teams solve complex accounting issues in a practical way. Gary contributes to the firm’s global view on a variety of financial reporting matters.Heather Horn is the PwC National Office Sustainability & Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s quarterly webcast series.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com. Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

Our revenue miniseries continues with identifying the contract, the first step in the five-step model in the revenue standard. It's important to get this step right to appropriately apply the model for recognizing revenue. In this episode, we discuss:4:10 – The five criteria to have a contract with a customer under the revenue standard 8:23 – The impact of master services agreements and enforceable rights16:03 – Assessing collectibility of the consideration in the contract27:08 – Determining the contract term For more information, read chapter 2 of our Revenue guide. Also, to hear more on revenue topics, listen to the first episode in this miniseries, Gross versus net revenue: Is your company the principal or agent?. Additionally, follow this podcast on your favorite podcast app for more episodes.Mike Coleman is a partner in PwC's National Office with over 30 years of experience. Mike specializes in accounting for revenue and software arrangements and has served technology clients for much of his career. In addition, Mike has represented the firm on the AICPA Software Task Force.Pat Durbin is a Deputy Chief Accountant in PwC’s National Office. He has over 30 years of experience consulting with our clients and engagement teams on complex accounting matters, including issues related to revenue, compensation, income taxes, and inventory under both US GAAP and IFRS.Heather Horn is the PwC National Office Sustainability & Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s quarterly webcast series.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

Host Heather Horn welcomes back Will Evison, a director in PwC UK’s Global Sustainability, Climate, and Nature Strategy practice, to provide an update on the work of PwC’s Centre for Nature Positive Business and discuss the relationship between nature positive business strategy and reporting. In this episode, they discuss: 2:18– The purpose and progress of PwC’s Centre for Nature Positive Business 8:57 – The impact of the Corporate Sustainability Reporting Directive adoption on company strategies 10:45 – The importance of nature positive business12:58 – Nature reporting developments, including those related to the European Sustainability Reporting Standards and the Task Force on Nature Related Financial Disclosures (TNFD)23:27 – Insights on how companies can combine nature strategy and reporting28:55 – What’s on the horizon for nature positive business Interested in more background on measuring and reporting nature and biodiversity? Listen to our previous podcasts in the “Becoming nature positive” series (Committing, measuring and reporting and Strategizing and implementing) and check out PwC’s global nature hub here.  Also, referenced in the podcast, is the Nature Strategy Handbook developed by Business for Nature in collaboration with PwC UK (official partner of the campaign), as well as Managing natures risks: from understanding to action, a follow-up to an earlier analysis of the nature dependence of industries’ direct operations that was carried out by PwC as part of the World Economic Forum’s New Nature Economy Report Series and published in the Nature Risk Rising report in 2020.  Will Evison is a director in PwC UK’s Global Sustainability, Climate, and Nature Strategy practice, specializing in integrating natural and social capital analysis into decision making. With over 18 years’ experience delivering climate and nature-related projects with businesses, investment firms and public sector organizations across more than 20 countries, he also led the development of PwC’s Total Impact Measurement and Management methodologies (TIMM), and now manages PwC’s global TIMM center of excellence. These methodologies utilize predictive analytics, health economics, and wellbeing techniques to model outcomes. Heather Horn is the PwC National Office Sustainability & Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s quarterly webcast series.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com. Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

This episode begins a podcast miniseries on revenue topics with a discussion of principal versus agent (PvA) or “gross versus net” revenue. In other words, the principal in a transaction records revenue on a gross basis and the agent records revenue net. The PvA analysis can be subjective but it's important to get it right as it can materially impact a key line item in the income statement, revenue from contracts with customers.In this episode, we discuss:2:00 – An overview of the PvA model and reporting impacts8:45 – Key considerations in the PvA analysis9:50 – Assessing control16:25 – Challenges in applying the PvA analysis to specific arrangements, including:16:59 – Healthcare services24:15 – Payment processing30:12 – Additional reminders relating to the PvA analysis and related disclosuresFor more information, read chapter 10 of our Revenue guide. Additionally, follow this podcast on your favorite podcast app for more episodes.Mike Coleman is a partner in PwC's National Office with over 30 years of experience. Mike specializes in accounting for revenue and software arrangements and has served technology clients for much of his career. In addition, Mike has represented the firm on the AICPA Software Task Force.Pat Durbin is a Deputy Chief Accountant in PwC’s National Office. He has over 30 years of experience consulting with our clients and engagement teams on complex accounting matters, including issues related to revenue, compensation, income taxes, and inventory under both US GAAP and IFRS.Heather Horn is the PwC National Office Sustainability & Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com. Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

This episode dives into valuation relating to goodwill impairments, long-lived asset impairments, and business combinations. We discuss:1:15 – The meaning of “fair value” in financial reporting5:55 – Valuation considerations and insights related6:20 – Goodwill impairments34:30 – Impairments of long-lived assets42:53 – Business combinationsFor more information, read chapter 7 of our Fair value guide, chapters 2 and 9 of our Business combinations guide, and chapter 5 our Property, plant, equipment and other assets guide. Also, check out another recent podcast related to this topic, Impairment of long-lived assets held and used. Additionally, follow this podcast on your favorite podcast app for more episodes. Beth Paul is a Deputy Chief Accountant in PwC’s National Office responsible for a team of consultants that specialize in business combinations and related areas, such as consolidations, disposals, impairments, and segment reporting. Adam Smith is a managing director in PwC’s Deals practice with experience related to performing valuations of businesses, business interests, intangible assets, and derivatives. Adam’s valuation specialization supports a wide range of purposes, including financial reporting, litigation support, corporate planning and consulting, and mergers and acquisitions. Heather Horn is the PwC National Office Sustainability & Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series. Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

We continue our miniseries on consolidation accounting and dive into the evaluation of variable interests and the characteristics of a variable interest entity (VIE).In this episode, we discuss: 1:24 – An overview of the VIE model 3:30 – Determining whether there is a variable interest 11:25 – Identifying “at-risk” equity 15:28 – Evaluating whether an entity is a VIE by assessing the following characteristics exist: 16:00 – Insufficient equity investment at risk  24:27 – Equity lacks decision making rights 34:40 – Equity with nonsubstantive voting rights 37:38 – Lack of obligation to absorb losses or right to receive residual returns 41:45 – A recap of the episode and final thoughts For more information on this topic, read chapters 3 and 4 of our Consolidation guide. Also, for an overview of the consolidation framework, listen to the first episode in this miniseries, The consolidation framework – Getting started. Additionally, follow this podcast on your favorite podcast app for episodes on other topics. Matt Sabatini is a partner in PwC's National Office who helps clients and engagement teams navigate the accounting and financial reporting for complex transactions. He specializes in the accounting for M&A, consolidations, corporate reorganizations, recapitalizations, joint ventures, and other investments. Alexander Martin is a partner in PwC's Deals practice with over a decade of deals experience, helping clients solve complex accounting, financial reporting, and other business issues that arise from transaction-driven events such as mergers and acquisitions, divestitures, and capital raises. Heather Horn is the PwC National Office Sustainability & Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com. Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

We kick off our miniseries on consolidation accounting with an overview of the consolidation models and lay the foundation to go deeper into the variable interest entity model in the next two episodes.In this episode, we discuss:02:59 - Background on the two consolidation models12:54 - The overall consolidation framework14:20 - The variable interest entity model20:25 - The voting interest entity model23:13 - Consolidation scope exceptions28:13 - VIE model scope exceptionsFor more information on this topic, read chapter 1 of our Consolidation guide. Additionally, follow this podcast on your favorite podcast app for more episodes.Matt Sabatini is a partner in PwC's National Office who helps clients and engagement teams navigate the accounting and financial reporting for complex transactions. He specializes in the accounting for M&A, consolidations, corporate reorganizations, recapitalizations, joint ventures, and other investments.Alexander Martin is a partner in PwC's Deals practice with over a decade of deals experience, helping clients solve complex accounting, financial reporting, and other business issues that arise from transaction-driven events such as mergers and acquisitions, divestitures, and capital raises.Heather Horn is the PwC National Office Sustainability & Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com. Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

We wrap up our miniseries on accounting for financing transactions with a focus on the accounting for equity-linked instruments.In this episode, we discuss:2:03 - Why companies issue equity-linked instruments7:23 - Determining whether an instrument is freestanding or embedded13:13 - Determining whether an instrument is indexed to the entity’s own stock17:23 - Exercise contingencies19:50 - Settlement adjustments32:36 - Convertible debt instruments39:51 - Equity or liability classificationFor more information on these topics, read chapter 5 of our Financing transactions guide. Also, check out other episodes in our miniseries: Share repurchases – The type of arrangement matters, Accounting for preferred stock from issuance to retirement, and Understanding "mezzanine” equity. Additionally, follow this podcast on your favorite podcast app for more episodes. John Horan is a managing director in PwC’s National Office where he assists clients with complex accounting issues in the areas of foreign currency, liabilities and equity, earnings per share, and derivatives and hedging. John specializes in large capital transactions and initial public offerings.Bret Dooley is a Deputy Chief Accountant in PwC’s National Office who leads teams focused on the financial services sectors and accounting for financial instruments. He has over 25 years of experience in the financial services, banking, and capital markets industries. Bret focuses on emerging financial reporting issues related to financial instruments, developing interpretive guidance, and assisting clients in resolving complex accounting matters.Heather Horn is the PwC National Office Sustainability & Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com. Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

Next up in our miniseries on accounting for financing transactions is mezzanine equity. When an instrument is presented as mezzanine equity, it is not permanent equity or a liability. We explain what that means and provide an overview of how to account for it as well as the financial statement impacts.In this episode, we discuss:1:56 - Background and the associated SEC guidance on mezzanine equity3:52 - When mezzanine equity presentation is appropriate 27:20 - Measurement36:20 - Extinguishment38:13 - EPS impactsFor more information on these topics, read chapter 7 of our Financing transactions guide. Also, check out other episodes in our miniseries covering Accounting for preferred stock from issuance to retirement and Share repurchases – The type of arrangement matters. Additionally, follow this podcast on your favorite podcast app for more episodes.Chip Currie is a partner in PwC’s National office with nearly 30 years of experience assisting companies in resolving complex business and accounting issues. He concentrates on the accounting for financial instruments under both current and emerging standards and works with many of the firm's largest financial services clients and a number of non-financial services clients on treasury-related matters.Heather Horn is the PwC National Office Sustainability & Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com. Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.