Chapter 2: FASB Codification - Introduction and Search Strategies

Question 1

What does it mean for codification to authoritative?

Answer 1

Being authoritative means that it establishes GAAP.

Question 2

Why was FASB codification developed?

Answer 2

To centralize guidance and reduce the risk that preparers would miss important issues if they had to research in multiple places.

Question 3

Aside from the FASB, which standard setting bodies’ guidance is included in the codification?

Answer 3

• Private Company Council
• Industry specific guidance
• SEC

Question 4

FASBs recommended search method to start a search?

Answer 4

Browse Search: “User directed” search where the researcher by navigates to topics that might apply.

Question 5

Which two organizations give the FASB its authority?

Answer 5

SEC and AICPA

Question 6

Is all SEC guidance included in the codification?

Answer 6

No, SEC guidance that does not apply to public companies will not appear in codification.

Question 7

Is SEC guidance considered authoritative for all entities?

Answer 7

No, it isn’t authoritative for non-public entities.

Question 8

What are the types of codification searches?

Answer 8

Browse and Keyword

Question 9

In the following codification reference template, what do the following letters represent?

XXX-YY-ZZ-PP

Answer 9

XXX - Topic
YY - Subtopic
ZZ - Section
PP - Paragraph

Question 10

What does the implementation guidance provide?

Answer 10

• Interpretive guidance describing how the guidance should be applied to specific scenarios.
• Examples illustrating application of the guidance.

Question 11

What is subsection S-99 used for?

Answer 11

S-99 is where a researcher can find SEC guidance that doesn’t fit into another section.

Question 12

When citing a defined term, should you cite the Master Glossary or the individual codification topic?

Answer 12

Individual Codification Topic

Question 13

What is considered required reading?

Answer 13

• Implementation Guidance
• SEC Guidance (S Sections)

Question 14

What does the “Show Sources” feature provide?

Answer 14

References to source documents that gave rise to individual Codification paragraphs

Question 15

What does the “Cross-Reference” feature provide?

Answer 15

• Allows researchers to match Codification topics with the original standards that were used to populate the Codification.
• Includes acronym meanings for original pronouncements

Question 16

What is pending content?

Answer 16

Content that has been added to the Codification but is not yet “fully effective.” Use transition guidance to determine if the pending content will be effective when your transaction is exectuted.