To help accounting professionals easily navigate through 50-plus years of unorganized US generally accepted accounting principles (GAAP) and standards the Trustees of the Financial Accounting Foundation approved the Financial Accounting Standards Board (FASB) Accounting Standards Codification (Codification.) By codifying authoritative US GAAP, FASB will provide users with real-time and accurate information in one location. Concurrently, FASB developed the FASB Codification Research System; a web-based system allowing registered users to electronically research accounting issues. Since 2009, the codification became the single source of nongovernmental authoritative GAAP.
Various standard setters issue authoritative literature that is included in the Codification, literature not included is considered nonauthoritative. FASB, the Emerging Issues Task Force, the Accounting Principles Board, and the American Institute of CPAs are a few standard setters that create the authoritative literature included in the Codification. The Codification also includes content issued by the Securities and Exchange Commission that are relevant to financial statements.
When conducting research on the Codification Research System in regard to an accounting issue there are three primary ways to perform the search: by the word search function, the “Go To” feature, or the browse by topic option. For example if we were to use Capitalization of Interest as our research topic we can type the topic in the search field and search the entire codification. The “Go To” feature is available for more experienced users that know the specific codification Topic, subtopic, and section codes. The last option is the browse by topic option, which takes you dir...
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...fication came about and how to understand the organization of the Codification. FASB also created a visual tutorial that demonstrates the features and functions that the website offers. Knowing how to use the Codification Research System will allow you to research accounting issues more efficiently and effectively.
Works Cited
"Accounting Standards Codification: Notice to Constituents (v4.1) About the Codification." FASB: Financial Accounting Standards Board. 30 Apr. 2010. Web. 26 Nov. 2010. .
FASB Codification. Digital image. FASB Accounting Standards Codification Professional View. FASB. Web. 28 Nov. 2010. .
According to the FASB Accounting Standards Codification, goodwill is “An asset representing the future economic benefits arising from other assets acquired in a business combination or an acquisition by a not for profit entity...” (glossary). Goodwill is measured by the premium price we pay for a company; we calculate premium price by subtracting the amount we paid by the estimated price (Fair value) of the company and if we paid more goodwill is created. Goodwill is an intangible asset so it has an indefinite life because it cannot lose value over a specific amount of time. We test for impairment to find out if goodwill has kept its value or if it has declined and we test for impairment on an annual basis. However, goodwill in FASB Accounting Standards
Financial Accounting Standards Board (FASB). Accounting Standards Codification TM. Financial Accounting Standards Board (FASB), 2010. Web. 16 May 2014.
The goal of the Codification is to simplify the organization of thousands of authoritative U.S. accounting pronouncements issued by multiple standard-setters. To achieve this goal, the FASB initiated a project to integrate and topically organize all relevant accounting pronouncements issued by the U.S. standard-setters including those of the FASB, the American Institute of Certified Public Accountants (AICPA), and the Emerging Issues Task Force (EITF)
On February 25, 2016, the FASB issued a new accounting standard with respect to the financial reporting of leases. Under the new standard, lessees will need to report all leases with a long-term on the balance sheets. The new standard purports to increase the comparability and transparency among different companies and provide investors of a more faithful representation with more accurate information on company liabilities.
Until late 2002, financial reporting standards (FRS) in New Zealand were developed based on a sector neutral approach. This meant a single set of accounting standards were applied to all entities regardless of which sector they were operating in. This was achievable because when FRS was created, the financial reporting standards board (FRSB) took into account that entities in the public sector, not-for-profit sector and private sector would be applying these standards. This included having to think about a broad range of transactions, different reasons for carrying out transactions, the readers of financial statements for all sectors, and the information that those readers needed (Brady, 2009). Not only did FRS account for the range of entities that would be applying the standards but it was also written in a language that was appropriate and made sense for all entities in each sector (Brady, 2009). However, since the decision to
In the world of international finance there are two major accounting systems; GAAP, which stands for Generally Accepted Accounting Principles, and IFRS, which stands for International Financial Reporting Standards. The United States prefers GAAP while the European market, as well as many other countries, prefers IFRS. By 2015 the Securities Exchange Commission is anticipating a total transfer to IFRS in the United States. Though the differences between GAAP and IFRS are few, they could affect accuracy of financial reporting throughout the world. It is important to understand the differences and similarities between both GAAP and IFRS if one is to globalize ones market (Logue).
... standard and help to reduce the preparer cost. And it has also enhanced the financial statements decision usefulness and make the organization prepare for expanded disclosure requirements.
5 Recognition and Measurement in Financial Statements of Business Enterprises, revenue should not be recognized until they are realized or realizable (FASB, 1984). In other words, when revenues are recognized if they are realizable is when the stated assets have need received or they are readily held convertible to known figures. It is also stated that revenue can be recognized when it is earned. Accounting Standards Codification 606-10-25-1 states that an entity shall account for a contract with a customer that is within the scope of: the parties to the contract approving the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations, the entity can identify each party’s rights regarding the goods or services to be transferred, the entity can identify the payment terms for the goods or services to be transferred, the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract), and it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer (FASB,
Financial Accounting Standards Board. (1985). Statement of Financial Accounting Standards No. 86. Norwalk. Retrieved April 7, 2014, from http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1175820922177&blobheader=application%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-Disposition&blobheadervalue2=189998&blobheadervalue1=filename%3Dfas86.pdf&blobcol=url
Albrecht, W. S., Stice, J. D., Stice, E. K., & Skousen, k. F. (2002). Accounting Concepts and Applications. Cincinnati: South-Western.
Private and public accounting has long been discussed and disputed in regards to financial reporting. Since the Financial Accounting Standards Board (FASB) was created in 1973, accountants have called for different accounting regulations for private and public accounting sectors, as private companies do not have the resources to meet the complex requirements of public companies. Private companies currently are not required by law to issue annual or quarterly financial statements (James, 2012). Private companies do, however, have the option to apply the U.S. Generally Accepted Accounting Principles (GAAP), cash basis, or accrual accounting to their financial statements (James, 2012).
One of the most debatable topics in the accounting industry today is the extent in which we should make the financial statements understandable to the general population. The FASB currently gears its reporting standards toward...
65). Classification provides assurance that information is recorded and properly presented in the correct accounts (AU Section 326, p.1863). Auditors often gather evidence by evaluating which items should have been expensed and which should have been capitalized. Understandability procedures ensure that disclosures are stated in a way that can be understood by financial statement users. This includes using simple language, such as shorter words and unambiguous sentences, and transparent ideas back by sufficient context (Smith & Taffler, 1992, p.
ABC LTD COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2012 NOTE 2012 Revenue 2 828,500 Cost of sales 3 (460,000) Gross profit 368,500 Other income 4 2,500 Operating expenses 5 361000 Profit before income tax 10000 Income tax expense (30%) 3,000 Profit for the year 7000 Other comprehensive income change in revaulation surplus 38500 Other comprehensive income for the year, net of tax 38500 Total comprehensive income for the year 45500 ABC LTD STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2012 NOTES 2012 ASSETS Current assets Cash and cash equivalents 6 100500 Trade and other receivables 7 45,200 Inventories 8 87700 Other current assets 9 7000
The purpose of this essay is to outline the structure of the International Accounting Standards Committee Foundation.