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ACCRUED LIABILITY are liabilities which are incurred, but for which payment is not yet made, during a given accounting period. Some examples in a manufacturing environment would be: wages, taxes, suppliers/vendors, etc.
PUSH-DOWN ACCOUNTING, in acquisitions, is an exception to the general rule that the acquiree's carrying values are unaffected by the purchase may arise when substantially all of the acquiree's shares are purchased by the acquirer. In that case, the acquirer may direct the acquiree to revalue its assets in accordance with the fair values attributed to those assets by the acquirer. This practice is known as push-down accounting, because the fair values are 'pushed down' to the acquiree's books. The net effect is the same as if the acquirer had formed a new subsidiary, which then purchased all of the assets and liabilities of the acquiree. There are two advantages to push-down accounting: a. The first is that the financial position and results of operations of the acquiree will be reported on the same economic basis in both the consolidated statements and its own separate entity statements. Without push-down accounting, for example, it would be possible for the subsidiary to report a profit on its own and yet contribute an operating loss to the parent's consolidated results, if the consolidation adjustments are sufficient to tip the balance between profit and loss; and, b. The second advantage is that the process of consolidation will be greatly simplified for the parent. Since the carrying values will be the same as the acquisition fair values, there will be no need for many of the consolidation adjustments that otherwise will be required every time consolidated statements are prepared.
QUALIFIED DIVIDENDS are the ordinary dividends received in tax years beginning after 2002 that are subject to the same 5% or 15% maximum tax rate that applies to net capital gain. They are shown in box 1b of Form 1099 DIV. Qualified dividends are subject to the new 15% maximum capital gains rate if the applicable regular tax rate is 25% or higher. If the applicable regular tax rate is lower than 25%, qualified dividends are subject to the new 5% maximum capital gains rate. To qualify for the 5% or 15% maximum rate, all of the following requirements must be met: a. The dividends must have been paid by a U.S. corporation or a qualified foreign corporation; b. The dividends are not of the type listed later under Dividends that are not qualified dividends; and, c. The proper holding period is met. The following dividends are not qualified dividends. They are not qualified dividends even if they are shown in box 1b of Form 1099 DIV: a. Capital gain distributions; b. Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U.S. building and loan associations, U.S. savings and loan associations, federal savings and loan associations, and similar financial institutions. These amounts are reportable as interest income; c. Dividends from a corporation that is a tax-exempt organization or farmer's cooperative during the corporation's tax year in which the dividends were paid or during the corporation's previous tax year; d. Dividends paid by a corporation on employer securities that are held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation; e. Dividends on any share of stock to the extent that the shareholder is obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property; and, f. Payments in lieu of dividends, but only if the shareholder knows or has reason to know that the payments are not qualified dividends.
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