Specialized accounting rules apply to certain types of transactions. Financings and recapitalizations, mergers and acquisitions and other ownership transfers and corporate restructures can present complex financial management and reporting challenges. Often, options exist which allow a certain degree of flexibility in election one accounting or tax treatment over another. Depending on the type of transaction, entirely new charts of accounts may be required, and new companies may need to be established.
Subsidiaries and holding companies may need to be created, consolidations may be required, cut off and initiation of a new set of books could be required, and the new and old sets of books may need to be reconciled and prepared consistently to ensure proper reporting on a GAAP basis as well as for tax purposes. Transactions that occur other than at the beginning or end of a tax year may create the need to cut-off a company prior to the normal fiscal year end and require set up of a new company mid-year. Maintaining such records accurately is critical to management’s understanding of the financial performance of the company as well as to the propriety of the compliance with tax regulations.
Such complex transactions require not only understanding of generally accepted accounting principles, but also tax rules and consequences as well.
If you need expert financial assistance for litigation or dispute resolutions, contact us. We can provide technical and strategic support to enhance your results.