- 12 - $288,911 of the $339,211 in installment contracts expenditures on its 1994 Federal income tax return. ACC now claims that it was entitled to deduct for 1994 the remaining $50,300 of installment contracts expenditures ($339,211 - $288,911). As to the respective years, ACC deducted officers’ compensation of $158,099 and $217,036 and salaries/wages of $126,464 and $194,306. The portion of the officers’ compensation, salaries/wages, and overhead which was deducted but not in issue is attributable to ACC’s servicing of the installment contracts. For financial accounting purposes, ACC separately listed the installment contracts as assets on its 1993 and 1994 balance sheets. In addition, ACC initially deducted the installment contracts expenditures of $267,832 for 1993 but amended that year’s financial statements to amortize the expenditures over the expected life of the related installment contracts. ACC’s independent auditors required the amendment and related amortization in order to comply with Statement of Financial Accounting Standards No. 91 (SFAS 91), Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases.7 ACC 7 The record does not indicate why ACC’s auditors believed that the amendment was required under SFAS 91. Whereas SFAS 91 provides explicitly for the deferral of “direct loan origination costs”, it does not provide similarly as to the direct costs of acquiring loans. SFAS 91 provides as to the acquisition of loans that “15. The initial investment in a purchased loan or group of loans shall include the amount paid to the seller plus any fees (continued...)Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011