The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings per Share, which replaces APB Opinion 15. FAS 128 is effective for financial statements issued for periods ending after December 15, 1997. The Statement requires dual presentation of basic and diluted EPS by entities with complex capital structures. Basic EPS includes no dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. While this proposed SOP will not directly impact investment companies, it will most likely impact the larger investment advisors.
Many companies currently expense costs to develop internal-use software as incurred.
For purposes of amortization and impairment, capitalized costs would be treated in the same manner as other long-lived assets. Capitalizing costs that were previously expensed would increase the current profitability of an investment advisor. This change could have an impact on the advisor's bonus program and the annual presentation to a fund's board of directors regarding the advisor's profitability. The good news is that there is really nothing new to report. We hear that the IRS is wrapping up a few of their audits, which have taken longer than expected, but with no significant findings.