Wiley GAAP 2015

Interpretation and Application of Generally Accepted Accounting Principles

Joanne M. Flood

• Publisher: Wiley
• Year: 2014
• ISBN:
  9781118945063
• Edition: 1
• Topic: Aides à l'étude
• Subtopic: Guides d'étude CPA

The quick, complete, cross-referenced GAAP guide, with illustrations, explanations, and examples

Wiley GAAP 2015 contains the most comprehensive coverage of all GAAP pronouncements in a single volume, providing professionals with a complete reference to the entire GAAP hierarchy. This new edition includes the latest updates to the standards, along with AICPA ASEC statements of position and a comprehensive cross-reference of accounting topics to the new FASB codification system. All pronouncements are fully explained in detail, including terminology, and practice exercises demonstrate real-world application. Each chapter includes a discussion of perspectives and issues, sources of GAAP, definitions, concepts, rules, and examples, with specific appendices where applicable. This useful guide contains more examples and illustrations than any other GAAP reference, and all original pronouncements are referenced to the FASB Current Text.

GAAP is constantly being updated, and users require expert interpretation and explanation of relevant principles with every new pronouncement. This book provides clear, user-friendly guidance, including FASB Technical Bulletins, AcSEC Practice Bulletins, FASB Implementation Guides, and AICPA Statements of Position and Accounting Interpretations. Readers will:

• Refer to GAAP standards and ASEC statements quickly and easily
• Understand relevant terminology, concepts, and rules
• Study detailed examples to gain a solid working knowledge of the standards
• Gain confidence by practicing GAAP applications before using it in the field

This guide represents the most complete, comprehensive GAAP reference available, and the digital format allows for instant access to needed information through the point-and-click index and Table of Contents. Busy professionals need to get up to speed quickly without sacrificing a solid understanding, and Wiley GAAP 2015 is the essential user-friendly reference.

Chapter 1
ASC 105 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

1. PERSPECTIVES AND ISSUES
   1. What Is GAAP?
2. DEFINITIONS OF TERMS
3. CONCEPTS, RULES, AND EXAMPLES
   1. History of GAAP
   2. GAAP Codification
   3. Standards-setting Process
   4. Researching GAAP Problems
   5. Research Procedures
   6. Search Authoritative Literature (Step 6)—Further Explanation
   7. The Concept of Materiality
   8. The Conceptual Framework
   9. CON 8—Chapter 1: The Objective of General Purpose Financial Reporting
   10. CON 8—Chapter 3: Qualitative Characteristics of Useful Financial Information
   11. CON 5: Recognition and Measurement in Financial Statements of Business Enterprises
   12. CON 6: Elements of Financial Statements
   13. CON 7: Using Cash Flow Information and Present Value in Accounting Measurements

PERSPECTIVES AND ISSUES

What Is GAAP?

The FASB Accounting Standards Codification^TM (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

Nonauthoritative Sources. The Codification lists some possible nonauthoriative sources:

• Practices that are widely recognized and prevalent either generally or in the industry
• FASB Concepts Statements
• American Institute of Certified Public Accountants (AICPA) Issues Papers
• International Financial Reporting Standards of the International Accounting Standards Board
• Pronouncements of professional associations or regulatory agencies
• Technical Information Service Inquiries and Replies included in AICPA Technical Practice Aids
• Accounting textbooks, handbooks, and articles.
• (ASC 105-10-05-3)

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 to best 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 quantitative standards that require economic information to be reflected numerically.

Disclosure Principles. Disclosure principles deal with factors that are not always quantifiable. Disclosures involve qualitative information that is an essential ingredient of a full set of financial statements. Their absence would make the financial statements misleading by omitting information relevant to the decision-making needs of the reader. Disclosure principles complement recognition principles by expanding on some quantitative data and explaining assumptions underlying the numerical information and providing additional information on accounting policies, contingencies, uncertainties, etc., which are essential to fully understand the performance and financial condition of the reporting enterprise.

DEFINITIONS OF TERMS

Source: ASC 105-10-20 Glossary

Nongovernmental Entity. An entity that is not required to issue financial reports in accordance with guidance promulgated by the Governmental Accounting Standards Board or the Federal Accounting Standards Advisory Board.

Nonpublic Entity. Any entity that does not meet any of the following conditions:

1. Its debt or equity securities trade in a public market either on a stock exchange (domestic or foreign) or in an over-the-counter market, including securities quoted only locally or regionally.
2. It is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets).
3. It files with a regulatory agency in preparation for the sale of any class of debt or equity securities in a public market.
4. It is required to file or furnish financial statements with the Securities and Exchange Commission.
5. It is controlled by an entity covered by criteria (a) through (d).

CONCEPTS, RULES, AND EXAMPLES

History of GAAP

From time to time, the bodies given responsibility for the promulgation of GAAP have changed, and indeed m...