Financial Accounting Standards Codification

Question 1

What are the six goals of the FASC?

Answer 1

Ans:
1) simplify the structure and accessibility of authoritative
GAAP.
2) Provide all authoritative literature in a single location.
3) Reduce the time and effort required to research an
accounting issue.
4) Reduce the risk of noncompliance with GAAP.
5) Facilitate updating of accounting standards.
6) Assist the FASB with research and convergence (IFRS)
effort.

Question 2

How is authoritative GAAP updated?

Answer 2

Ans:

Through FASB’s ASU. ASU is chronological by year of FASB’s update.

Question 3

How is the ASU summarized on FASB’s website?

Answer 3

Ans:

1) Summarize the key aspects of the update
2) Detail how the codification will change
3) Explain the basis for the update.

Question 4

What is the Codification Structure?

Answer 4

Ans:

1) Areas ( highest)
2) Topics
3) Subtopics
4) Sections
5) Subsections
6) Paragraphs (lowest)

Question 5

Areas

Answer 5

Ans:

The highest level in the codification is the areas of which there are nine each with a specific numeric identifier:

Question 6

What are Area’s nine with each specific identifier?

Answer 6

Ans(topics):
General Principles (100)
Presentation (200) ( does not address recognition or measurement)
Assets (300)
Liabilities (400)
Equity (500)
Revenue (600)
Expenses (700)
Broad transactions (800) (transaction involving more than one area such as interest, and subsequent events)
Industry (900) (special industry accounting)

Question 7

Topics

Answer 7

Ans:

There are 90 topics across the nine areas.

Question 8

Subtopics

Answer 8

Ans:
Subtopic contains the big picture level guidance for a topic while other subtopics provide additional guidance and exceptions.

Question 9

Sections

Answer 9

Ans:

Each subtopic has following 16 sections with the associated numeric identifier.

Question 10

What are sections numeric identifier

Answer 10

Ans:

00 = Status

05 = Overview and background

10 = Objectives

15 = Scope and Scope Exceptions

20 = Glossary

25 = Recognition

30 = Initial measurement

35 = Subsequent Measurement

40 = Derecognition

45 = Other Presentation Matters

50 = Disclosure

55 = Implementation guidance and illustrations

60 = Relationships

65 = Transition and Open Effective Date Information

70 = Grandfathered Guidance

75 = XBRL Definitions

Question 11

Subsections

Answer 11

Ans:

a section is divided into subsections to facilitate the exposition. These are not numbered.

Question 12

Paragraphs

Answer 12

Ans:
The actual accounting standard material is provided in paragraphs within sections or subsections. Paragraph numbers do not change over time. New paragraphs will use a letter extension.

Question 13

What are Paragraph’s hierarchical structure?

Answer 13

Ans:

Greater than symbol(s) ( >,&raquo_space;,&raquo_space;>) are used for nesting paragraphs.

Question 14

What are the four different ways for researching an issue through the codification?

Answer 14

Ans:

1) Browse the structure in the menu provided
2) Search by key word; this mode allows narrowing of a search both by related term and by major area within the codification structure.
3) Enter the specific codification location ( Using the numerical system within the Codification); this is designed for users who know their topic and section of interest
4) Search by previous GAAP standard number

Question 15

What does codification not include?

Answer 15

Ans:

1) Other Comprehensive basis of accounting
2) Cash Basis accounting
3) Income Tax basis Accounting
4) Regulatory accounting principles
5) Governmental Accounting Standards