The article discusses the goodwill aspect of valuation of items appearing on the financial statements of a business concern. The definition of goodwill as presented by accountants and the courts have been given consideration. Among them is the definition given by T.H. Sanders, H.R. Hatfield and U. Moore in "A Statement of Accounting Principles," as the excess of the total value of the assets of a going concern over that part of the value which can be allocated to specific assets. All legal cases on the subject agree that the goodwill of a business, though intangible, is property which may be sold as a legitimate asset if it is substantial and may be paid for in capital stock. A cardinal principle in the accounting for goodwill is that it should be shown on the books only when purchased, and then at no more than such purchase price. The article discusses the question whether the cost of extensive advertising, expected to yield benefits for a long period may be capitalized as an asset. It discusses the accounting principle that in transactions the value of goodwill is based on an accurate estimate of prospective net earnings and the amortization of goodwill after its acquisition.
This article focuses on accounting for guaranteed wage plans. Most of the wage leveling plans are basically employee withholding plans whereby some of the earnings of the employee are withheld and are paid to him later when his earnings are low. The obvious disadvantage of this plan lies in the employee's reluctance to having part of his earnings withheld. The majority of wage leveling plans have therefore created little employee enthusiasm, for they are little more than savings plans, supervised by the company. A major difference between the leveling and the minimum-guarantee type of plan is the number of employees that are covered. Where the wage process is primarily one of leveling wages, there is no excessive cost to the employer for time not worked. One of the most complex accounting problems arising out of recent developments in guaranteed wage payments is concerned with the special exemptions allowed for the payment of overtime premiums under the Fair Labor Standards Act. The record-keeping process is further complicated if the company is to take advantage of the overtime premium relief provisions of the Fair Labor Standards Act.
The article focuses on updating of accounting curriculum. Many accounting departments in schools of business have adjusted their curricula to meet these modern requirements or are working in that direction. The reasons for the unsatisfactory situation can be traced back to the early growth of accounting practice and the teaching of accounting at the college level. New professional organizations were established such as the Controllers Institute of America and the National Association of Cost Accountants. But none of these has been able to match the strongly entrenched prestige of the organizations of certified public accountants. Free the accounting curriculum from the present predominant orientation toward financial accounting and the topics included in the CPA examination, and give equal space and time to the other major applications of accounting, particularly in the managerial field. Recognizing what the needs of students are and then adapt the curriculum to meet these needs. In order to do this, it will be necessary to do research to determine what areas of knowledge, if any, can best be imparted in the classroom, and which areas might better be more efficiently and effectively carried on by doctoral students.
The Internal Revenue Code of 1954 sought to remove inequities, remove hindrances to economic growth, and clarify existing tax law, within the basic framework of existing revenue sources, taxpayer classifications, and rates. Thus there was no attempt during this revision of the laws to make any major re-distribution of the tax burden to achieve greater equity as between economic groups. Efforts to achieve greater tax equity were limited to some of the more obvious hardship situations within existing classifications involving matters of health, education, family status, retirement, and income security. Among these were provisions relating to medical deduction, sick pay, health plans, students, scholarships, fellowships, charitable contributions, surviving spouse, child care, retirement income credit, annuity exclusions, personal residences, insurance contracts and soil and water conservation. The equity rules are sound in concept and will benefit many millions of tax-payers. Some to whom they would normally apply, however, will not need them as their exemptions and the standard deductions are large enough to make their returns non-taxable. The additional rules provided to obtain more equitable treatment, of necessity, adds complications to the law, the regulations, and the tax forms. This has added to the taxpayer's problem of understanding the tax requirements and has made it more difficult for him to make certain that he pays the proper tax. Continued effort is required on the part of the internal revenue service to see that the tax returns are correct to in sure that no one pays no more nor less than he owes; on the part of accountants to further develop the habit among their clients for better records so that the tax can be accurately determined and substantiated; and, on the part of the taxpayers to familiarize themselves with the many new tax rules. This raises the question as to the advisability of easing some of the complexities for the extreme low income groups until there is a better general understanding of the rules by the lower middle, middle, and upper income groups. This would tend to narrow the problem of taxpayer education. One of several possible methods for such relief that is pointed out for discussion involved the introduction of a minimum standard deduction. The present standard deduction is, in general, 10% of the adjusted gross income. Thus a wage earner receiving only $720 a year is entitled to a standard deduction, in lieu of itemized deductions, of only $72, or 10% of $720. This small deduction too often forces him to itemize deductions involving much by way of record keeping as well as tax knowledge. A minimum standard deduction of $250 or 10% of the adjusted gross income, whichever is the greater, would cut through much of this paper work at the lower end of the scale and permit everyone to concentrate on the more important phases of taxation. Other possible methods for some relief of paper work relate to more liberalized filing requirements as an alternative to the present minimum requirements which currently cause the filing of several million non-taxable returns. Emphasis is placed upon the need for taxpayers to thoroughly understand their rights under the law or else many of the changes in the law to provide more equity will become only an idle gesture. The conclusion was expressed that the revenue service's current high school program of tax education, the accountants' help in informing the taxpayers, and continued advancement in administrative techniques will provide substantial improvement, but will never fully bridge the gap between the law's requirements and complete compliance for the mass of taxpayers.
The traditional form of the charge and discharge statement based on the practices of the Surrogate's Court of the County of New York has been presented in accounting texts for over fifty years. This manner of presentation has given three generations of accounting students the impression that this form is appropriate for use by executors and administrators throughout the United States. An evaluation of the form, however, indicates that it does not meet requirements common to the majority of states. A further evaluation of the form indicates that it does not pass the tests of a good accounting report either. The disposition of any other item in the inventory would be as difficult to ascertain from a charge and discharge statement as was that of the bonds. It is also apparent that in many states this form of report would be unacceptable because it does not contain a statement of the receipts and disbursements of estate cash. Even though this form of report is deficient in these respects, it does meet or exceed the requirements of most states in that it contains listings of both beginning and ending inventories of estate assets.
This article presents information on the graduates entering into the field of accounting. It appears likely that very soon the departments of accountancy will not be concerned with the attraction of more students but instead they will be concerned with the problem of handling the large number of students who want to major in accountancy. Universities should expect in the near future to be forced to consider proper means of restricting enrollment in the field of accountancy. The profession should be given adequate representation at "career days" in high schools and colleges. Many high schools and colleges set aside one or more days of each year to acquaint students with the various professions and occupations available to them. Vocational guidance advisors, deans of men, placement officers, and other non-accountants are no doubt sincere in their efforts to counsel, but they often give a distorted or inaccurate picture to interested students. Accountants should seek every opportunity to participate in these career, days or vocational guidance programs. Every school, which has a curriculum in accountancy, should have an accountancy club or a similar organization to sponsor activities, which are usually carried on by such a group. An accountancy club is ordinarily open to any student in a college of commerce who has had one year of accounting. Its purpose is to acquaint students with the various types of opportunities available in accounting, to bring them in contact with leaders in the field, to establish a good student-faculty relationship, to give students training in leadership, and to supply them with information.