Wiley Practitioner's Guide to GAAP 2022

Interpretation and Application of Generally Accepted Accounting Principles

Joanne M. Flood

• Publisher: Wiley
• Year: 2022
• ISBN:
  9781119595885
• Edition: 1
• Topic: Study Aids
• Subtopic: CPA (Certified Public Accountant) Study Guides

The most comprehensive guide to US GAAP—thoroughly updated to reflect the latest pronouncements

US GAAP is constantly being updated, requiring its users to be armed with expert interpretation and explanation of the relevant principles. Wiley GAAP 2022 provides the most complete coverage of all Financial Accounting Standards Board (FASB) Topics—including the latest updates.

Each chapter includes discussion of perspectives and issues, sources of GAAP, practice-oriented examples, and accurate definitions of terms, concepts, and rules. Every FASB Topic is fully explained in a clear, reader-friendly way with dynamic graphic to aid in understanding complex topics. Extensively updated to reflect all current US GAAP changes, this indispensable book:

• Reviews the latest changes to accounting principles, including inventory, financial instruments, leases, debt, and goodwill
• Offers expert guidance on issues surrounding specific pronouncements
• Includes comprehensive cross-references and topic-specific appendices
• Explains how the standards apply to common real-world scenarios
• Clarifies implementation through numerous illustrations and practical examples

Accurate and up-to-date GAAP implementation is crucial for eliminating the risk of noncompliance. Wiley GAAP 2022 is your one-stop resource for staying up-to-date with constantly-changing guidelines—providing the insight and guidance accounting professionals need.

1
ASC 105 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

• Perspectives and Issues
  • What Is GAAP?
    • Recognition Principles
    • Disclosure Principles
• Definitions of Terms
• Concepts, Rules, and Examples
  • History of GAAP
  • GAAP Codification
    • Other and Nonauthoritative Sources
    • SEC Guidance in the Codification
  • The Standards-Setting Process
    • Accounting Standards Updates
    • Maintenance Updates
    • American Institute of Certified Public Accountants (AICPA)
    • Codification Terminology
  • Researching GAAP Problems
    • Codification Structure
  • Research Procedures
    • Step 1: Identify the Problem
    • Step 2: Analyze the Problem
    • Step 3: Refine the Problem Statement
    • Step 4: Identify Plausible Alternatives
    • Step 5: Develop a Research Strategy
    • Step 6: Search Authoritative Literature (Described in Additional Detail Below)
    • Step 7: Evaluation of the Information Obtained
  • Search Authoritative Literature (Step 6)—Further Explanation
    • Researching Wiley GAAP
    • Researching Nonpromulgated GAAP
    • Internet-Based Research Sources
  • Descriptions of Materiality
    • Quantitative Factors
    • Qualitative Factors
    • Degree of Precision
  • The Conceptual Framework
    • Components of the Conceptual Framework
  • CON 8—Chapter 1: The Objective of General Purpose Financial Reporting
  • CON 8—Chapter 3: Qualitative Characteristics of Useful Financial Information
    • Fundamental Qualitative Characteristics
    • Enhancing Qualities
    • Trade-Offs
    • Cost Constraint
  • CON 8—Chapter 8: Notes to Financial Statements
  • CON 5: Recognition and Measurement in Financial Statements of Business Enterprises
  • CON 6: Elements of Financial Statements
    • Definitions of Terms
    • Elements of Not-for-Profit Financial Statements
  • CON 7: Using Cash Flow Information and Present Value in Accounting Measurements
    • How CON 7 Measures Differ from Previously Utilized Present Value Techniques
    • Measuring Liabilities
    • Interest Method of Allocation
    • Accounting for Changes in Expected Cash Flows
    • Application of Present Value Tables and Formulas
    • Example of a Present Value Calculation
    • Example of an Annuity Present Value Calculation
    • Example of the Relevance of Present Values
    • Practical Matters

PERSPECTIVES AND ISSUES

What Is GAAP?

The FASB Accounting Standards Codification™ (ASC) is the:

… source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. In addition to the SEC's rules and interpretive releases, the SEC staff issues Staff Accounting Bulletins that represent practices followed by the staff in administering SEC disclosure requirements, and it utilizes SEC Staff Announcements and Observer comments made at Emerging Issues Task Force meetings to publicly announce its views on certain accounting issues for SEC registrants. (ASC 105-10-05-1)

In the absence of authoritative guidance, the FASB Codification (the Codification) offers the following approach:

If the guidance for a transaction or event is not specified within a source of authoritative GAAP for that entity, an entity shall first consider accounting principles for similar transactions or events within a source of authoritative GAAP for that entity and then consider nonauthoritative guidance from other sources. An entity shall not follow the accounting treatment specified in accounting guidance for similar transactions or events in cases in which those accounting principles either prohibit the application of the accounting treatment to the particular transaction or event or indicate that the accounting treatment should not be applied by analogy. (ASC 105-10-05-2)

GAAP establishes:

• The measurement of economic activity,
• The time when such measurements are to be made and recorded,
• The disclosures surrounding this activity, and
• The preparation and presentation of summarized economic information in the form of financial statements.

GAAP develops when questions arise about how best to accomplish those items. In response to those questions, GAAP is either prescribed in official pronouncements of authoritative bodies empowered to create it, or it originates over time through the development of customary practices that evolve when authoritative bodies fail to respond. Thus, GAAP is a reaction to and a product of the economic environment in which it develops. As such, the development of accounting and financial reporting standards has lagged the development and creation of increasingly intricate economic structures and transactions.

There are two broad categories of accounting principles—recognition and disclosure.

Recognition Principles Recognition principles determine the timing and measurement of items that enter the accounting cycle and impact the financial statements. These are reflected in quantitative standards that require economic information to be reflected numerically.

Disclosure Principles Di...