As most CFMs know, the PCM calculation is a ratio of two figures: The numerator is the cost incurred on a contract and the denominator is the total estimated cost on that contract. (This is the cost-to-cost method.) Then, that ratio is multiplied by the contract amount to derive the revenue to be recognized.
Revenue recognition is not dependent on, or related to, billings – even though the next step is the comparison of the computed revenue to billings. That comparison is only to adjust the booked revenue based on billings to the PCM-computed revenue. (more…)
Be Cautious With Hard-to-Value IRAs ■ The IRS lists examples of traditional IRA assets not having a readily available fair market value in the Instructions For Forms 5498 and 1099-R, p. 17, at www.irs.gov/pub/irs-pdf/i1099r.pdf. The “Other” Exchange-Traded Funds ■ The U.S. Securities And Exchange Commission provides information about closed-end funds at www.sec.gov/answers/mfclose.htm. Profit Sharing Plans for Your Small Business ■ The U.S. Department of Labor spells out the rules for profit-sharing plans in its publication, Choosing A Retirement Solution For Your Small Business, p. 2, at www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/choosing.pdf.
In April, the U.S. Department of Labor (DOL) made headlines with its final rule covering conflicts of interest among investment advisers. Media coverage focused on the difference between a “fiduciary” standard and a “suitability” standard. Financial advisors and investment firms have been debating this issue—often heatedly—for years, and the DOL action probably will bring about changes within the industry. The new rules also have a message for investors, especially those who rely upon an advisor. This lesson may not be astounding but it’s worth keeping in mind: You should know what investment advice is costing and whether you’re getting your money’s worth.
Each year, many companies—large and small—offer summer internships. The interns are frequently college students between academic years, and they usually are unpaid. Recently, such arrangements have come under fire from those contending interns should be put on the payroll. The advantages of unpaid internships are clear: Companies probably have relatively low financial obligations for the services of their interns. Especially in the summer, when many employees are on vacation, it may be helpful to have extra individuals around. If interns make a favorable impression, they might provide employers with a stream of productive, paid employees in the future. Alternatively, various advocates assert that interns are truly employees, who should be paid for the work they do. The federal Department of Labor (DOL) apparently takes this view, at least in many circumstances. The DOL has published a six-part test, all parts of which must be met, in order for a for profit firm to justify not paying interns. The key point is that an internship must be training that benefits the intern, without any current benefit to the employer. Failing to pass the six-point test, an employer must compensate interns according to the law for the services performed, by this standard. (more…)