How to Record Unallowable Merger Costs
Capturing professional services and administrative costs related to mergers and acquisitions which are unallowable per FAR 31.205-27.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable Expense - Reorganization | Expense | 25,000.00 | - |
| Accounts Payable | Liability | - | 25,000.00 |
💡 Accountant's Note
FAR 31.205-27 explicitly prohibits the recovery of costs associated with reorganizing a business, such as legal fees for mergers or acquisitions.
Practitioner & Systems Framework
💻 ERP Architecture
Map these costs to a '999' or similar unallowable account suffix to ensure they are excluded from the indirect rate calculation.
⚠️ Audit Flags
Sudden spikes in legal and consulting fees during M&A activity phases.
📄 Required Documentation
Invoices from law firms or consultants clearly identifying the nature of the transaction support.
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
Related Journal Entries
Defense, Aerospace & Government Contracting
Cost-Plus-Fixed-Fee (CPFF) Contract — Revenue Recognition as Costs Are Incurred
Defense, Aerospace & Government Contracting
Firm Fixed-Price (FFP) Contract — Cost-to-Cost Percentage of Completion Revenue
Defense, Aerospace & Government Contracting
Time & Materials (T&M) Contract — Revenue at Contractual Labor Rates Plus Material Cost
Discussion & Community Questions
Loading comments...