6 Things to Know to About Annuities

Annuities are one of many products that folks have in their nest egg. But first, what exactly is an annuity?

Simply put, it’s a contract with an insurance company that promises to pay the buyer a steady stream of income in the future. It can be either a fixed or variable income stream. The term “annuity” can also refer to a sum of money payable yearly or at other regular intervals.

There are some things to know before you charge headlong into putting your assets into an annuity. So, here are a few watch outs to consider before you head in that direction.

Ask the Right Questions

First up, what kind of annuity is it? What about the fees and optional riders? Is there a Market Value Adjustment aka MVA? What is the AM Best rating, Comdex rating? How long is the rate guaranteed? How much can you take out penalty-free? How is the gain calculated for index annuities? Is there a surrender charge assessed if I die? How long is the contract term? How is their service?Lots of questions, yes, but the more you ask, the better.

Learn About New Features and Products

Here’s something interesting to ponder:Did you know that 99 percent of index annuities don’t include dividends? Or that 99 percent of index annuities only lock in the rates for 1 to 2 years? In fact, there are new products that include dividends and lock in the rates for the length of the term. Who knew? Here’s a list of the 10 best annuity companies as of September 2024 you might want to check out.

Vet the History of the Company

This is key. For instance, how long have they held their AM Best rating? How long have they been operating under their current name? And finally, did you know that start-ups buy shell companies formed 75+ years ago to advertise they’ve been around since then? Yep, make sure you do your research.

Watch Out for Fees on Variable Annuities

Here’s the thing: Variable annuities have lots of different layers of fees. Make sure you secure an itemized breakdown of all of the fees before you commit. If your variable annuity earns 7 percent to 9 percent gross and you pay 3 percent to 4 percent in fees, you might be better off in a fixed-rate product.

Check Out Long-Term Care Riders

Believe it or not, some annuities offer 200 percent to 300 percent of your initial deposit in long-term care benefits with an optional rider. In fact,long-term care riders on life insurance policies can be more affordable than standalone long-term care policies. However, should you not utilizeyour long-term care benefits, your heirs will get the full death benefit from your life insurance policy, less what you owe on any of your policy loans.

Take a Look at All Types of Annuities

Typically, most banks sell only five to eight annuity companies. So don’t rely on just your bank. If you do, you’ll miss out on 95 percent of the products that are out there. And this is important to know: Lots of insurance agents and “advisors” focus on selling a few index or variable annuities. Make sure you shop around before buying. 

Annuities are just one of many diversified assets you might want to include in your investment portfolio – as you know, diversity is crucial. But when it comes to annuities, there are specific questions and things to think about. Make sure you do your due diligence before you invest.

Sources

11 Annuity Tips You Should Know (annuityresources.org)

Long-Term Care Rider: What It Is, How It Works (investopedia.com)

Zero Trust Security Models: The New Standard Against Data Breaches?

As technology evolves, so have data breaches, which have become a significant threat to businesses of all sizes. We frequently hear reports of high-profile attacks on major organizations, global corporations, and even government agencies. Emerging technologies such as generative artificial intelligence and machine learning make cybersecurity more challenging. They enable cybercriminals to automate attacks, create sophisticated phishing schemes, and develop advanced malware to evade traditional security measures. Hence, companies have no choice but to change how they approach cybersecurity.

To deal with these modern threats, Zero Trust security models are gaining widespread adoption as the preferred standard for effectively protecting against data breaches.

What is Zero Trust?

Zero Trust is a cybersecurity framework based on the “never trust, always verify” principle. Unlike traditional models that grant access based on network location, Zero Trust requires continuous verification of each user, device, and application attempting to access resources.

Instead of assuming that someone within the network can be trusted, Zero Trust demands constant authentication and least-privilege access. This means users are granted access to only the data and resources they need to perform their tasks. Basically, every interaction is assumed to be a breach.

How Zero Trust Differs from Traditional Security Models

Historically, businesses operated on a “perimeter-based” approach – trusting everything inside their network and guarding against threats from the outside. However, the once-clear network boundary has become unclear with the rise in remote work, cloud computing, and mobile devices. Breaches today can occur internally, often by compromised accounts, rogue insiders, or lateral movement of malware.

Cyberthreats have become such a huge problem that the U.S. government issued an executive order to help improve the nation’s cyber security by mandating that federal agencies adopt the Zero Trust architecture. This further pushes businesses to rethink their cybersecurity strategies.

Key Components of a Zero Trust Model

Zero Trust models are built on several core principles:

  • Continuous verification – Authentication is ongoing, requiring verification for every request made by a user or device.
  • Least-privilege access – Users receive only the minimum level of access needed to perform their jobs.
  • Micro-segmentation – Networks are divided into smaller zones, limiting the lateral movement of potential threats.
  • Contextual monitoring – Continuous monitoring of users and devices based on context – such as location, device health, and behavior – to identify abnormal activities.
  • Multi-factor authentication (MFA) – MFA requires users to provide two or more forms of authentication, such as a password combined with a biometric factor or a security token.
  • Encryption – All data must be encrypted to protect it from unauthorized access or interception. Encryption ensures that even if attackers manage to capture data, they cannot read or exploit it without the appropriate decryption keys.
  • Access Controls – Applying strict policies to determine who can access specific data and systems based on their role and identity.

Benefits of Zero Trust

  1. Stronger protection against data breaches – Zero Trust models significantly reduce the risk of data breaches by enforcing strict identity verification and limiting access to only necessary resources. Even if an attacker gains entry, micro-segmentation ensures limited movement, containing threats, and minimizing damage.
  2. Enhanced regulatory compliance – Zero Trust helps businesses meet regulatory requirements like GDPR and HIPAA by enforcing strict access controls and continuous monitoring. This approach simplifies compliance and ensures that only authorized users can access sensitive data, reducing the risk of fines.
  3. Improved visibility and control – With continuous monitoring, Zero Trust provides better visibility into network activity, making detecting suspicious behavior in real-time easier. This added control enhances security and operational efficiency, allowing immediate responses to potential threats.
  4. Reduction of insider threats – Zero Trust minimizes insider threats by requiring strict identity verification and limiting access, even for internal users. This makes it harder for malicious insiders or compromised accounts to cause significant damage within the network.
  5. Support for remote work and cloud environments – Zero Trust offers safe access to resources from any location. This flexibility ensures that businesses maintain strong security for both in-office and remote teams.

Conclusion

Zero Trust security models represent a significant shift from traditional perimeter-based defenses to a more dynamic and resilient approach. For business owners, adopting Zero Trust principles can provide peace of mind and enhanced protection in today’s unpredictable cyber landscape. With time, emerging technologies like artificial intelligence, IoT, and cloud computing will continue to shape the evolution of Zero Trust, making it an essential part of a robust cybersecurity strategy.

Keeping the Government Open, Stopping the Flow of Synthetic Drugs, and Improving Wireless Communications on Land and in Space

Continuing Appropriations and Extensions Act, 2025 (HR 9747) – This continuing resolution was introduced on Sept. 22 as a “clean” extenuation of the federal budget to fund the government until Dec. 20. Up until this point, a handful of Republicans had attached unrelated bills pertaining to November election restrictions, which they did not have the votes to pass in the House and would never have passed in the Senate. After several weeks of threatening to shut down the government by not passing a continuing appropriations bill, the House Speaker proposed this “last-minute” tied over with the minimum appropriations necessary to keep the government up and running. While it still does not solidify the federal budget for the 2025 fiscal year (Sept. 29, 2024, through Sept. 27, 2025), this bill is expected to pass in the House on Sept. 25 and to clear the Senate and be signed by the president by Sept. 29.

Preventing the Financing of Illegal Synthetic Drugs Act (HR 1076) – Introduced by Rep. Mónica De La Cruz (R-TX) on Feb. 17, 2023, this bill directs the Government Accountability Office to conduct a study on illegal funding sources related to the trafficking of synthetic drugs such fentanyl and methamphetamine. The bill passed in the House on May 22, 2023, in the Senate on July 23, 2024, and was signed into law by the president on Sept. 13.

Launch Communications Act (S 1648) – This act will update ground-to-space rocket communications going forward. Presently, commercial missions are required to use the government-owned spectrum to communicate during launches, including special temporary authority for private companies. This bill permits the Federal Communications Commission (FCC) to facilitate seamless access to broadband spectrum frequencies for commercial space launches and re-entries. The bill, which was introduced on May 17, 2023, by Sen. Eric Schmitt (R-MO), passed unanimously in the Senate on Oct. 21, 2023, and in the House on Sept. 17. It is currently awaiting signature by the president for enactment.

FUTURE Networks Act (HR 1513) – The acronym stands for Future Uses of Technology Upholding Reliable and Enhanced Networks Act. Introduced by Doris Matsui (D-CA) on March 9, 2023, this act would instruct the Federal Communications Commission (FCC) to establish a 6G Task Force comprised of private, academic and government experts to monitor the status of sixth-generation wireless technology, including its possible uses. The House passed the bill on Sept. 18, and the bill now rests with the Senate.

Violence Against Women by Illegal Aliens Act (HR 7909) – This bill would amend the Immigration and Nationality Act to make non-U.S. nationals (aliens) convicted of or having admitted to committing sex offenses or domestic violence (including conspiracy to commit a sex offense) be ineligible for country admission and deportable. Introduced by Rep. Nancy Mace (R-SC), the bill passed in the House on Sept. 18 and currently lies in the Senate.

Intergovernmental Critical Minerals Task Force Act (S 1871) – Introduced by Sen. Gary Peters (D-MI) on June 8, 2023, this bill would enable coordination among state, local, tribal and territorial jurisdictions with the federal government to mitigate national security risks related to the current U.S. critical mineral supply chains. Specifically, the intent is to make the United States less reliant on China and other countries for critical minerals and rare earth metals. Provisions of the bill allow for development, mining and strengthening of our domestic workforce and to improve partnerships with allied countries for dependable mineral supply chains. The bill passed in the Senate on Sept. 8 and is currently with the House.

SMART Leasing Act (S 211) – Introduced on Feb. 1, 2023, by Sen. Gary Peters (D-MI), this bill would launch a program to lease underutilized properties owned by the federal government. The net funding would then be used for capital projects and to help offset the national deficit. The act passed in the Senate on Aug. 1 and is currently under consideration in the House.

How to Account for Stranded Assets

How to Account for Stranded AssetsWith more than 14 million electric vehicle (EV) registrations in 2023 worldwide and 2023 seeing an increase in EV sales over 2022 by 35 percent, manufacturers are probably happy – but not those producing the traditional internal combustion engine (ICE) vehicles. This is according to the International Energy Agency’s Global EV Outlook 2024: Trends in Electric Cars.

This statistic is important because it illustrates how assets can be rendered less useful and potentially turn into stranded assets. A stranded asset, defined, is an asset that’s no longer able to provide its owner the profitable payback they originally expected. The difference is based on shifts, primarily negative, that impact the asset’s expected productive performance.

How & Why Assets Become Stranded

When an asset loses its earning power, normally due to extraneous circumstances, like the invention of a more efficient battery, it can become stranded. For example, a machine that’s exclusively capable of making an internal combustion engine (ICE) vehicle can be considered stranded as the transition to electric vehicles (EV) is made. Since the machine is less valuable because it makes fewer and fewer ICE vehicles, it could be impaired or stranded.

This example illustrates that new technology, especially one that moves forward, can render equipment less useful than previously expected. Other ways assets can be stranded include administrative modifications, evolving societal conventions, etc.

Considerations for Stranded Assets by Testing an Asset for Impairment

The primary way to establish if an asset is stranded is to run an impairment test on it. Stranded assets impact the income statement via a non-cash loss, along with impacting the balance sheet by reducing asset value. Therefore, companies must report a loss on the income statement as it’s completely written off the balance sheet.

Whether it’s through the lens of International Financial Reporting Standards (IFRS) or generally accepted accounting principles (GAAP), whether an asset is intangible or tangible, when its value issue is less than book value or impaired, it must be written down.

GAAP Standard

The first step is to determine the carrying value. This is calculated by subtracting the accumulated depreciation from the asset’s original cost. From there, the asset’s projected undiscounted future cash flows (UFCF) are analyzed against the asset’s carrying value. If the total UFCF is less than the carrying value, an asset is considered impaired.

IFRS Standard

The first step also looks at an asset’s carrying value. From there, if either of the following two values is lower than the carrying value, it’s considered impaired:

  • Present value of future cash flows generated by the asset (the so-called “fair value in use” consideration)
  • Fair value less costs to sell the asset

Financial Statement Considerations

If an asset is impaired or stranded, whatever amount the asset drops by, it lowers the business’ asset’s value on the balance sheet. Looking at the income statement, it’s considered a loss. Additionally, since a devaluation is not considered a cash event, it doesn’t trigger any cash outflows. A real-world example can better illustrate this.

The following assumes a business reports its accounting under GAAP. It could be a company that produces fracking equipment to recover natural gas and crude oil. With the uncertainty of domestic fossil fuel policy, specifically where land can be explored, the threat of OPEC and/or Iran being able to determine their production, and the threat of increased government spending on green energy, fracking equipment has a current carrying value of $10 million. However, with increased competition from the three different factors, the same assets can produce an aggregate of $7.5 million in undiscounted future cash flows.

Based on GAAP, since the carrying value is $2.5 million more than the total undiscounted future cash flows, the business would need to record the same amount for an impairment loss. The journal entries would be:

Loss from Impairment Debit:. $2.5 million

Provision for Impairment Losses Credit:  $2.5 million

Conclusion

When it comes to accounting for stranded assets, it’s important to ensure guidelines are followed based on the type of accounting standards businesses must follow.

Important Update on New Company Reporting Laws

On Jan. 1, 2024, the U.S. government debuted the Corporate Transparency Act (CTA). This legislation established the requirement for the majority of private companies, both big and small, to file information with the Financial Crimes Enforcement Network (FinCEN).

As with most new laws, the initial guidance and interpretations have been both challenged and questioned. In response, FinCEN recently turned out new FAQs, which we review below.

Big Question First: To Report or Not

Reporting is generally required by all private, for-profit entities. This includes corporations, LLCs, S-Corps, etc., whenever the company was created by filing a document with the office of the Secretary of State. Entities formed under the laws of jurisdictions outside the United States are also likely subject to reporting, if they are registered to do business in the United States.

To help visualize the above, you can take a look at this flowchart published on the FinCEN website.

Screenshot from FinCEN website

While the general rules seem (and are) broad in construction, there are 23 specific exemptions, including publicly traded companies, nonprofits and certain large operating companies. The FinCEN’s Small Entity Compliance Guide checklist can help in determining if you fall under an exemption.

Now, let’s move on to more specific questions.

Who is a beneficial owner?

An individual who either directly or indirectly exercises substantial controls or owns 25 percent or more of the reporting company.

What constitutes substantial control?

There are four (separate) ways to exercise substantial control:

  • The individual is a senior officer
  • Has the authority to appoint or remove officers or a majority of directors
  • An important decision-maker (regarding strategic, business or finance)
  • They have any other form of substantial control as per the FinCEN’s Small Entity Compliance Guide

Who is a company applicant for a reporting company?

Another of the more perplexing questions revolves around exactly who a company applicant of a reporting company is.

First, only reporting companies created or registered on or after Jan. 1, 2024, need to concern themselves with the company applicant rules; companies formed before are exempt.

There are two possible individuals who could be considered company applicants. One is the person who directly files the documents to create and register the company. This person will always exist and be an applicant of the reporting company. In the case where there were multiple people involved in the filing or registration, the individual who primarily controlled the filing is also considered an applicant.

Thankfully, FinCEN created another handy flowchart to help navigate through this rather confusing decision.

Screenshot from FinCEN website

What about sole proprietorships?

It depends. Sole proprietorships only have to report if the entity was created by filing a document with a secretary of state or similar office. In other words, if you just start freelancing and don’t file anything with a secretary of state office, you are not subject to the reporting requirements. Basically, if you didn’t form an LLC, you don’t need to report. For example, obtaining an employer identification number, a fictitious business name or a professional or occupational license does not subject you to the FinCEN reporting requirements.

What if my company ceased to exist before the CTA requirements went into effect?

If a company ceased to exist on or before Jan. 1, 2024, then they are NOT subject to the reporting requirements.

Do I have to report more than once?

No, you only have to file an initial report once. There is NOT an annual report. You do, however, need to amend your original filing to update pertinent changes or corrections within 30 days of their occurrence.

What happens if I don’t file a report?

Willful violation can subject one to a fine of up to $500 per day until the violation is resolved. Criminal penalties could also be imposed, resulting in up to two years imprisonment and a fine of up to $10,000.

Conclusion

The FinCEN released its guidance in the hopes of clarifying uncertainties around the new CTA created reporting requirements. The goal is to ensure full and accurate compliance without undue burden on companies and individuals.

Looking at the Expanded Accounting Equation

Whether it’s a private equity transaction or an institutional or retail investor, analyzing a company’s financial statements is an important part of fundamental analysis. One important but basic way to analyze whether a company is worth investing in is through the expanded accounting equation. The most straightforward equation to analyze a business’ balance sheet is:

Assets = Liabilities + Shareholder’s Equity

However, there are more detailed equations that analysts can employ to more closely examine a company’s financial situation. One way to look at it is by more comprehensive equations that break down net income and the transactions related to the equity owners (dividends, etc.).

This equation is a building block of accounting because it focuses on double-entry accounting – or that each occurrence impacts the bifurcated accounting equation – requiring the correct solution to always be in balance. This system is used for journal entries, regardless of the type of transaction. Looking at this equation in greater detail, here’s a more granular example:

Assets = Retained Earnings + Liabilities + Share Capital

Assets are the capital that give a business the ability to benefit from projected, increased productivity and hopefully increased gains. Whether it’s short-term (less than 12 months) or long-term (more than 12 months), it can take the form of real estate, cash, cash-equivalents, pre-paid expenses, accounts receivable, etc.

Liabilities are the amounts owed to lenders due to past agreements. This is related to the sum of liabilities, which is the total of current (up to 12 months) liabilities, plus long-term (more than 12 months) debt and related obligations. This takes the form of loans, accounts payable, owed taxes, etc. Shareholder’s equity is how much the company owners may assert ownership on after accounting for all liabilities.

Another way this equation can be expressed is as follows:

Assets = Liabilities + Contributed Capital + Beginning Retained Earnings + Revenue + Expenses + Dividends

Depending on the financial outcome of the company, dividends and expenses may be negative numbers.

To further explain, these variations on the equation help analysts break down shareholder’s equity. Revenues and expenses illustrate the delta in net income over discrete accounting/earning periods from sales and costs, respectively. Stockholder transactions are able to be accounted for by looking at what capital the original stockholders provided to the business and dividends, or earnings distributed to the company’s stockholders. Retained earnings are carried over from a prior accounting period to the present accounting period. Despite being elementary, the information is helpful for business managers and investors to develop a higher level of analysis.

When it comes to evaluating bankruptcy, it can help investors determine the likelihood of receiving compensation. When it comes to liabilities, should debts be due sooner or over longer periods of time, these debts always have priority. When it comes to liquidated assets, these are then used to satisfy shareholders’ equity, until funds are exhausted.  

While this is not a comprehensive look at how to analyze a company, it provides internal and external stakeholders with a way to build a strong financial analytical foundation.

7 Reasons You Need a Will

Drafting a will is not something that people, for the most part, want to think about. But no one gets out of life alive. So if you want to have a say in what happens to your property and assets after you’re gone, a will is very smart idea. Here are a few specific reasons having a will makes good sense.

Facilitates Probate

First, a definition: Probate is the legal procedure your estate goes through after you pass. During this process, a court will start the process of distributing your estate to those you designate. When you have a will, the probate process has a legal document as a guide, one the court uses that clearly defines your wishes. This way, there are fewer roadblocks. Things go a lot more smoothly.

Protects Your Estate

Now, if you don’t have a will, there’s no binding, legal document that espouses what you want to do with your assets. Instead, the probate court will distribute your estate according to your state’s intestacy laws. There’s no guarantee that the state agrees with what you wanted.

Designates Who Gets What

This is one of the most important. If your family includes ex-spouses and/or estranged relatives, having a will helps prevent squabbles. An unhappy relative will think twice about protesting when you have a well-drafted will.

Disinherits People, Too

If you don’t have a will, again, probate courts will distribute your estate based on your state’s intestacy laws, which create a hierarchy of inheritance among your surviving family members. Because families – and life – can be messy, when you have a will, you can specify who doesn’t get parts of your estate. Better still, you can even specify certain people to receive your assets as beneficiaries, who aren’t necessarily relatives. When you’re this specific within a legal document, it can further safeguard your wishes.

Provides For Your Children and Pets

When you have a will, it gives you the power to decide who will care for your children if they’re minors when you pass. If you don’t decide, a court will appoint a guardian. It’s safe to say that most people don’t want this; you know your children best. Since pets are considered property and they can’t inherit, you can make sure your beloved furry family members are adopted by a person or organization that you know and trust.

Specifies the Executor and Administrator of Your Estate

You get to decide who these people are, though sometimes they can be the same person. Generally, their function is to make sure your beneficiaries receive the assets you’ve designated for them. Having these trusted people in place will give you peace of mind. When you don’t have these individuals in place, you give up the control you could have had.

Helps Minimize Estate Taxes

Yes, it’s true. Your family, should they inherit property from you after you’re gone, might have to pay taxes on it. That’s why it pays to look into estate planning tools. When you have a will, you can build these stipulations into it. Just ask your accountant and/or lawyer to help you navigate these waters. It’s well worth it.

These are a just a few of the reasons you need a will. Probably the main reason is that tomorrow isn’t guaranteed. When you’re gone, you’ve missed your opportunity to legally draft your final desires. That’s why, when you’ve set up provisions for all the things you’ve worked so hard for and all the people you leave behind, it’s truly an act of love.

 

Sources

Top 10 Reasons to Have a Will (findlaw.com)

Executor vs. Administrator: What’s the Difference? – Policygenius

Probate – What Is Probate & How To Avoid It | Trust & Will (trustandwill.com)

 

From Likes to Leads: Converting Social Media Analytics into Business Opportunities

Social media has become a powerful tool for helping businesses reach their prospects and customers. Using social media, a business can connect with its audience, build brand awareness and drive sales. However, many struggle to convert social media engagement – likes, shares, comments and followers – into tangible business opportunities. Transforming these engagements into actionable leads and sales is where the real power of social media lies. To successfully unlock this potential, businesses must effectively use social media analytics.

Understanding Social Media Analytics

Social media analytics involves gathering and analyzing data from social media platforms to help make informed business decisions. This data includes metrics such as engagement rates, reach, impressions, follower growth and sentiment analysis, among others. By understanding what this data signifies, businesses can gain valuable insights into the behavior, preferences and needs of their audience. These insights are then used to tailor marketing strategies, create more relevant content and improve customer interactions.

The Shift from Vanity Metrics to Meaningful Insights

Sometimes, it’s easy to get caught up in vanity metrics, such as the number of likes or followers. It is important to note that these metrics do not necessarily translate to sales. To convert social media engagement into leads, businesses need to focus on meaningful insights that reveal how engaged their audience is and how this engagement can be leveraged.

For instance, instead of focusing on the number of likes, businesses should analyze which types of posts are receiving the most engagement and why. This includes checking the topics, formats or times of day that generate more interest and engagement. By identifying patterns and trends, businesses can enhance their content strategy to focus on what resonates most with their audience.

Identifying and Nurturing Potential Leads

After having a better understanding of what drives engagement, businesses can begin to identify potential leads within their social media audience. This is where advanced analytics tools come into play. Tools that track and analyze individual user interactions will help identify users who consistently engage with posted content.

For example, a user who frequently comments on posts, shares content, or clicks on links may demonstrate a strong interest in the business’ products or services. Businesses can categorize such users as potential leads. More focus is placed on this category by nurturing them through personalized content, direct engagement, and targeted offers.

It is also good to note that social media analytics is a powerful tool for analyzing competitors’ strategies, too. By monitoring their comment sections, a business can identify gaps or unmet needs in their audience that present opportunities to capture market share.

Leveraging Social Media Ads for Lead Generation

Social media advertising is another effective way to convert social media engagement into leads. Platforms like Facebook, Instagram, LinkedIn and X (formerly Twitter) offer advanced targeting options that allow businesses to create highly personalized ad campaigns based on user data. Businesses can create ads specifically designed to appeal to their most engaged followers.

For instance, if analytics reveal that a particular segment of followers is highly interested in a specific product, businesses can create ads that feature this product and offer a special promotion or discount.

Turning Engagement into Sales Through Conversion Optimization

Once potential leads are identified and targeted through ads or personalized content, the next step is to optimize the conversion process. This involves ensuring a seamless journey from social media engagement to lead capture and eventual sale. A critical aspect of this process is the landing page – a dedicated page on the business’s website designed to capture leads.

The landing pages must be tailored to match the expectations set by the social media content or ads that drove the traffic. For example, if an ad on a social media platform promises a free or discounted offer, the landing page should prominently feature this offer. Additionally, it helps to A/B test different landing page designs, headlines, and calls to action to identify the most effective strategies.

Using Analytics to Measure and Improve ROI

Unlike traditional marketing channels, social media analytics can track and measure the effectiveness of marketing campaigns. By tracking key performance indicators (KPIs) such as reach, click-through rates, conversions and cost per lead, businesses can measure the effectiveness of their social media campaigns and make necessary adjustments.

Continuous monitoring and optimization ensure that social media efforts drive engagement and contribute to the business’s bottom line.

In conclusion, converting social media engagement into actionable leads and sales opportunities requires a strategic approach leveraging social media analytics’ power. Businesses can tailor their content, identify and nurture potential leads, and optimize their conversion strategies by moving beyond vanity metrics and focusing on meaningful insights. This will ultimately drive business growth and success in today’s competitive digital landscape.

U.S. Flag Mandate, Combatting Deepfake Pornography and Legislative Priorities of the Vice President Nominees in 2024 Election

All American Flag Act (S 1973) – Introduced by Sen. Sherrod Brown (D-OH) on June 14, 2023, this bill requires that all U.S. flags used by the Federal government be manufactured domestically. This includes all raw materials. One exception to this mandate is if flags cannot be produced of acceptable quality and quantity as needed at competitive market prices. The bill passed in the Senate on Nov. 2, 2023, in the House on July 22 and was signed into law by the president on July 30.

Disrupt Explicit Forged Images and Non-Consensual Edits Act of 2024 (S 3696) – This bipartisan bill, also known as the DEFIANCE Act, is designed to protect victims of deepfake pornography. It defines civil action as a federal remedy for non-consensual parties who are identifiable in digital forgeries and depicted as nude or engaging in sexually explicit conduct. The bill, which was introduced on Jan. 30 by Sen. Richard Durbin (D-IL), passed unanimously in the Senate on July 23. It goes to the House next, where a similar bill has been introduced.

 

Congress is not in session Aug. 5-30, as members return to their districts. 

Accounting for Convertible Debt Instruments

According to EY, the convertible debt market saw whipsaw action in issuances. Between 2015 and 2019, average issuance varied between $40 billion and $45 billion. However, it dropped to $22 billion in 2022, but re-accelerated to $52 billion in 2023. While the levels of issuance varied, the way this type of debt is accounted for has remained much calmer.

Defining a Convertible Bond

A convertible bond is a type of debt security that gives the investor the right to exchange the bond, at certain milestones, for a pre-determined percentage of equity in the issuing company. This investment vehicle has both equity and debt features.

Since this type of investment gives investors the potential for equity conversion into a company, the debt/bond side of it may present investors with a nominal coupon remittance or a potentially zero-coupon payment. However, there are important accounting considerations for this type of investment vehicle via generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS).

IFRS

When it comes to IFRS, convertible bonds are considered blended securities because they are partially debt and partially equity. The debt piece is accounted for by discounting the principal and interest paid out to the bondholder at the company’s cost of straight debt. The following example illustrates how it’s calculated:

The business presents a 10-year, $250 million convertible bond, providing investors with a 2.5 percent coupon rate and a 9.5 percent straight cost of debt. Based on discounting these variables, the present value of the principal and coupon payments is: $182,805,096 (assuming end-of-year, annual coupons). To determine the equity proportion, we must take $250 million and subtract $182,805,096, which equals $67,194,904.

Looking at the journal entry, we have following breakdown:

Cash: Debit $250,000,000

Convertible Debt Component – Liability = $182,805,096

Equity Component – Shareholder’s Equity = $67,194,904

Looking at the interest expense, this is calculated as follows:

The 9.5 percent (straight debt cost) is multiplied by the net present value of the beginning debt liability balance of the first year ($182,805,096) is $17,366,484.12. Since there’s a coupon payment of (2.5 percent X $250,000,000 = $6,250,000), the difference between $17,366,484.12 and $6,250,000 = $11,116,484.12 should be “accreted” to the debt liability or the debt balance.

The journal entry would be as follows:

Debit: Interest Expense $17,366,484.12

Credit: Cash $6,250,000

Credit: Accretion of Debt Discount – Liability = $11,116,484.12

Now, if at the bond’s maturity the investor is unable to convert the bond to equity according to the terms of the convertible note, the entire $250 million bond will be paid back to the investor. The journal entry will be as follows:

Debit: Convertible Debt $250,000,000

Credit: Cash $250,000,000

If, however, the investor of the convertible bond is favorable to it being exchanged, the journal entry will be as follows:

Debit: Convertible Debt $250,000,000

Credit: Share Capital – Shareholder’s Equity = $250,000,000

This explanation assumes that convertible bonds are only able to be converted into company equity. However, if the bond is cash settled, there are alternate considerations. It’s also assumed that the bond is issued at year’s end and makes its coupon payments once a year.

GAAP

Under generally accepted accounting principles (GAAP), present standards treat it as straight debt. This accounting practice changed from GAAP’s previous treatment of bifurcating it, similar to IFRS’ current treatment.

At issuance, the journal entries are as follows:

Debit: Cash $250,000,000

Credit: Convertible Debt $250,000,000

With this accounting treatment, it’s recognized as interest expense. Since this contrasts with IFRS, no accretion is required under GAAP. This assumes there’s no additional debt issuance costs when calculating interest expenses. Therefore, assuming the same initial debt amount at par, and the coupon rate, for year one, it’s the rate for the debt issuance multiplied by the full debt amount ($250,000,000).

The journal entry is as follows:

Debit: Interest Expense $6,250,000

Credit: Cash $6,250,000

If the convertible debt doesn’t present a good opportunity for the investor, they’ll receive the principal back. The journal entry is as follows:

Debit: Convertible Debt $250,000,000

Credit: Cash $250,000,000

If, however, the convertible debt presents the investor with an opportunity to convert to equity, and it’s exercised, the journal entry is presented as follows:

 Debit: Convertible Debt $250,000,000

 Credit: Share Capital – Shareholder’s Equity $250,000,000

Conclusion

While these examples do not explore all the potential scenarios when accounting for convertible debt, they show what considerations accountants must keep in mind when analyzing a transaction.