Long Island Food Council monthly meeting June 17, 2020 - - PowerPoint PPT Presentation

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Long Island Food Council

monthly meeting

June 17, 2020

Paycheck Protection Program Flexibility Act

Jim Aspromonti Marcum LLP james.aspromonti@marcumllp.com

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Paycheck Protection Program Flexibility Act

► Current PPP borrowers can choose a 24-

week period, rather than an 8-week period to spend PPP funds.

► New PPP borrowers will have a 24-week

covered period which cannot extend beyond December 31, 2020.

► The payroll expenditure requirement is now

60%, rather than 75%. If at least 60% of loan proceeds are not spent on payroll costs, there is no loan forgiveness.

► Note that technical modifications in the future

could restore partial forgiveness for loans that do not meet the 60% threshold.

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► The June 30 deadline to restore

workforce levels and wages is extended to December 31.

► There are two new alternatives for a

borrower to restore a potential reduction in forgiveness:

► An inability to find qualified employees

to replace those let go, and

► An inability to restore the business

• perations to February 15, 2020,

levels due to COVID-19-related

• perating restrictions.

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Paycheck Protection Program Flexibility Act

► The PPP loan term is extended from

two years to five years. An updated loan agreement with the bank may be required.

► (Borrowers should reach out to

bankers regarding loan modifications.)

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► Companies that participate in the

Payroll Protection Program Loan program will be eligible to defer the company portion of payroll taxes throughout 2020.

► This is a change from being eligible

for the payroll tax deferral only through the date a company receives loan forgiveness.

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2020 Interim Financial Statements In Process

► Consider Going Concern and future

cash flow implications.

► Recommend disclosure related to

potential known and unknown effects

• f shutdowns and worker shortages.

► Companies that elect to postpone

adoption of ASC 606 will be required to adopt as of 1/1/2020.

► Impairment issues need to be

considered for goodwill, intangibles and other long lived assets.

► Disclosure of PPP loans received as

• debt. Can’t assume forgiveness.

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► Current Accounting Principles Generally

Accepted in the US (“US GAAP”), does not specifically address the accounting by businesses that obtain a forgivable loan from the government.

► Each entity will need to address the

uncertainties and whether to account for the loan as debt or a grant.

► Entities that reflect the liability as debt will

need to consider extinguishment guidance

• f a liability.

► Entities that believe grant guidance will be

issued will follow the guidance of an income grant.

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Questions?

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www.marcumllp.com/coronavirus

Jim Aspromonti

Assurance Partner James.Aspromonti@marcumllp.com

DISCLAIMER: This presentation has been prepared for informational purposes only from sources believed accurate and reliable as of the date of preparation. It is intended to inform the reader about the subject matter addressed. This is not to be used or interpreted as tax or professional advice. Those seeking such advice should contact a Marcum professional to establish a client relationship.