Wiley GAAP Codification Enhanced E-Book

Barry J. Epstein

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 3158

Veröffentlichungsjahr: 2009

Beschreibung

Your single, authoritative source to GAAP under the new Accounting Standards Codification (ASC) system By mid-2009, the Financial Accounting Standards Board (FASB) is expected to release its Accounting Standards Codification (ASC), a new, clearer indexing system that is much easier to access and research. Though the Codification does not change U.S. generally accepted accounting principles (GAAP), it does reorganize the thousands of U.S. GAAP pronouncements from difficult-to-use chronological listings and multiple series of pronouncements into a single, easily accessible source conveniently organized by topic/subject. Arriving at just the right time, Wiley GAAP Codification Enhanced contains complete coverage of all levels of GAAP, as well as integrated cross-references to the new ASC. In addition, Wiley GAAP Codification Enhanced renders GAAP more understandable and accessible for research and is designed to reduce the amount of time and effort you spend to solve accounting research issues. Your authoritative guide to GAAP under the new codification system, this invaluable resource makes learning the new ACS system a breeze, with at-your-fingertips information that does the work for you. Practical and reliable, Wiley GAAP Codification Enhanced is your essential tool to navigate through these new, uncharted waters.

Leseprobe

Table of Contents

Title Page

Copyright Page

PREFACE

ABOUT THE AUTHORS

Chapter 1 - RESEARCHING GAAP MATTERS

DEVELOPMENT OF GAAP

RESEARCHING GAAP PROBLEMS

Chapter 2 - BALANCE SHEET

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 3 - STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 4 - STATEMENT OF CASH FLOWS

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 5 - ACCOUNTING POLICIES, CHANGES, AND RESTATEMENTS

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 6 - FAIR VALUE

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 7 - CASH, RECEIVABLES, AND PREPAID EXPENSES

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 8 - SHORT-TERM INVESTMENTS AND FINANCIAL INSTRUMENTS

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 9 - INVENTORY

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 10 - REVENUE RECOGNITION—EVOLVING PRINCIPLES AND SPECIALIZED APPLICATIONS

REVENUE RECOGNITION—GENERAL PRINCIPLES

LONG-TERM CONSTRUCTION CONTRACTS

SERVICE REVENUES

SALES WHEN COLLECTION IS UNCERTAIN

REVENUE RECOGNITION WHEN RIGHT OF RETURN EXISTS

PROFIT RECOGNITION ON REAL ESTATE SALES

REAL ESTATE OPERATIONS

FRANCHISING: ACCOUNTING BY FRANCHISORS

OTHER SPECIAL ACCOUNTING AND REPORTING ISSUES

Chapter 11 - LONG-LIVED ASSETS

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

Chapter 12 - LONG-TERM INVESTMENTS

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 13 - BUSINESS COMBINATIONS AND CONSOLIDATED FINANCIAL STATEMENTS

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

APPENDIX STANDARDS APPLICABLE TO PRE-2009 BUSINESS COMBINATIONS

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

INTERPRETIVE GUIDANCE

Chapter 14 - CURRENT LIABILITIES AND CONTINGENCIES

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 15 - LONG-TERM LIABILITIES

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 16 - LEASES

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 17 - INCOME TAXES

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 18 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 19 - STOCKHOLDERS’ EQUITY

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

APPENDIX A - FINANCIAL STATEMENT PRESENTATION

Chapter 20 - EARNINGS PER SHARE

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

APPENDIX - COMPREHENSIVE EXAMPLE

Chapter 21 - INTERIM REPORTING

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 22 - SEGMENT REPORTING

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

Chapter 23 - FOREIGN CURRENCY

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

APPENDIX - ACCOUNTS TO BE REMEASURED USING HISTORICAL EXCHANGE RATES

Chapter 24 - PERSONAL FINANCIAL STATEMENTS

PERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

APPENDIX - HYPOTHETICAL SET OF PERSONAL FINANCIAL STATEMENTS

Chapter 25 - SPECIALIZED INDUSTRY GAAP

BANKING AND THRIFT

BROADCASTING

CABLE TELEVISION

COMPUTER SOFTWARE DEVELOPERS

EMPLOYEE BENEFIT PLANS, INCLUDING PENSION FUNDS

FINANCE COMPANIES

GOVERNMENT CONTRACTORS

INSURANCE

INVESTMENT COMPANIES

MORTGAGE BANKING

MOTION PICTURES

NOT-FOR-PROFIT ORGANIZATIONS

OIL AND GAS PRODUCERS

RECORDING AND MUSIC PERSPECTIVE AND ISSUES

REGULATED OPERATIONS

TITLE PLANT

APPENDIX A - DISCLOSURE CHECKLIST FOR COMMERCIAL BUSINESSES

APPENDIX B - INTERNATIONAL VS. US ACCOUNTING STANDARDS

Index

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eISBN : 978-0-470-49830-9

PREFACE

GAAP 09: Codification Edition provides analytical explanations and copious illustrations of all current generally accepted accounting principles. The book integrates principles promulgated by all the relevant standard-setting bodies—the FASB, including its Emerging Issues Task Force’s consensus summaries and discussion issues and staff positions, and the AICPA’s Accounting Standards Executive Committee (AcSEC),

With the completion and public release of the FASB’s codification project, virtually all extant U.S. GAAP has been superseded by a unified, codified set of standards. All such guidance is now presented in a single, integrated set of materials, and former individual standards, interpretations, and other requirements are to be withdrawn. This book represents a complete integration of the new Accounting Standards Codification (ASC) references into the Wiley GAAP reference work that is now in its 25th annual edition.

The principal intended audience for the book is the practitioner, with the primary objective being to assist in resolving the myriad practical problems faced in applying GAAP. Accordingly, meaningful, realistic examples abound, guiding users in the application of GAAP to complex fact situations that must be dealt with in the real world practice of accounting In addition to this emphasis, a major strength of the book is that it does explain the theory of GAAP in sufficient detail to serve as a valuable adjunct to accounting textbooks. Much more than merely a reiteration of currently promulgated GAAP, it provides the user with the underlying conceptual bases for the rules, in order to facilitate the process of reasoning by analogy that is so necessary in dealing with the complicated, fast-changing world of commercial arrangements and transaction structures. It is based on the authors’ belief that proper application of GAAP demands an understanding of the logical underpinnings of all its technical requirements.

Each chapter of this book, or major section thereof, provides an overview discussion of the perspective and key issues associated with the topics covered; a listing of the professional pronouncements which guide practice; and a detailed discussion of the concepts and the accompanying examples. A comprehensive disclosure checklist, following the main text, offers practical guidance to preparing financial statements in accordance with GAAP, with supplemental insights into SEC-mandated disclosures as needed. Also included is a comprehensive comparison of GAAP to International (IFRS) standards, increasingly the norm for entities reporting outside the US, and soon, for U.S.-based entities as well.

The authors’ wish is that this book will serve preparers, practitioners, faculty, and students, as a reliable reference tool to facilitate their understanding of, and ability to apply, the complexities of the authoritative literature. Comments from readers, both as to errors and omissions and as to proposed improvements for future editions, should be addressed to Barry J. Epstein, c/o John Wiley & Sons, Inc., 155 N. 3rd Street, Suite 502, DeKalb, Illinois 60115.

Barry J. Epstein Ralph Nach Steven M. Bragg March 1, 2009

ABOUT THE AUTHORS

Barry J. Epstein, PhD, CPA, is a partner with Chicago-based Russell Novak & Company, LLP, where he specializes in technical consultation on accounting and auditing matters and corporate governance, and maintains a national practice as a consulting and testifying expert for commercial and other litigation matters, including accountants’ malpractice, contractual dispute resolution, damages modeling, and white-collar criminal defense. He has previously served in senior technical and litigation consulting positions with several regional and national CPA firms, and as a corporate finance executive and college professor. Dr. Epstein has authored or coauthored six books (including Wiley IFRS Interpretation and Application), hundreds of professional education courses, several articles in business or professional journals, and a weekly business column for an international newspaper. He has served on several state and national technical committees, including the AICPA’s Board of Examiners, served as chair of the Illinois CPA Society’s senior accounting technical committee, and held teaching positions at several universities. Dr. Epstein received his doctorate from the University of Pittsburgh, and also holds degrees from DePaul University and the University of Chicago. He is a member of the Illinois CPA Society, the AICPA, and the American Accounting Association.

Ralph Nach, CPA, is a Senior Consultant with AuditWatch, part of Thompson Reuters, for which he writes, teaches, and consults on a wide range of accounting, auditing, and financial reporting matters. He has been a practitioner for over thirty years, during which he has served in capacities including accountant, auditor, quality control director, peer reviewer, educator, chief learning officer, and consultant for several public accounting firms, including Arthur Anderson LLP. Most recently Mr. Nach served as a partner in the National Office of Audit and Accounting of McGladrey & Pullen, LLP. He is a former adjunct lecture in graduate accounting and finance at Northwestern University in Evanston, Illinois. Mr. Nach holds a BSBA with honors from the Walter E. Heller School of Business Administration of Roosevelt University in Chicago, and is a licensed CPA in Illinois. Mr. Nach has coauthored several other books and speaks nationally on accounting, auditing, and financial reporting topics. He is a member of the American Institute of Certified Public Accountants, the Information Systems Audit and Control Association (ISACA), the Illinois CPA Society, where he has served as a chairman and/or member of numerous committees, and an associate member of the Association of Certified Fraud Examiners.

Steven Bragg, CPA, CMA, CIA, CPIM, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young and auditor at Deloitte & Touche. He received a master’s degree in finance from Bentley College, an MBA from Babson College, and a Bachelor’s degree in Economics from the University of Maine. He is the author of 28 books, including Accounting Best Practices, The Ultimate Accountants’ Reference, and Controllership. He has been the two-time president of the Colorado Mountain Club. He resides with his wife and two daughters in Centennial, Colorado. Sign up for his free accounting best practices newsletter at www.stevebragg.com.

CODIFICATION TAXONOMY

1

RESEARCHING GAAP MATTERS

DEVELOPMENT OF GAAP

What Is GAAP?

The phrase “generally accepted accounting principles” is a technical accounting term that encompasses the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. It includes not only broad guidelines of general application, but also detailed practices and procedures. Those conventions, rules, and procedures provide a standard by which to measure financial presentations. Auditing Standards Board (ASB), AU Section 411

Generally accepted accounting principles (GAAP) are concerned with 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 objectives—measurement, timing of recognition, disclosure, or presentation. 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 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 deal with factors that are not always numeric. 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 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.

Who Created GAAP?

From time to time, the bodies given responsibility for the promulgation of GAAP have changed, and indeed more than a single such body has often shared this responsibility. GAAP established by all earlier standard-setting bodies, to the extent not withdrawn or superseded, remains in effect at the present time. These bodies are described in the following paragraphs.

Committee on Accounting Procedure. The first serious attempt to create formalized generally accepted accounting principles began in 1930, primarily as a consequence of the stock market crash of 1929 and the widespread perception that an absence of uniform and stringent financial reporting requirements had contributed to the rampant stock market speculation of the preceding decade that culminated with that crash. (Previously, GAAP had largely been defined by academic writings and general industry practices.) The American Institute of Accountants, (which in 1957 was renamed the American Institute of Certified Public Accountants [AICPA]), created a special committee to work with the New York Stock Exchange toward the goal of establishing standards for accounting procedures. The special committee recommended five rules to the Exchange that were published in 1938 as Accounting Research Bulletin (ARB) 1 of the Committee on Accounting Procedure. The Committee subsequently published 51 such bulletins, including Accounting Research Bulletin 43, which consolidated and superseded Bulletins 142. The Committee also attempted to achieve uniformity in accounting terminology. However, the Committee’s limited resources and lack of serious research efforts in support of its pronouncements were questioned in the late 1950s, particularly as a number of very complex controversial topics loomed on the horizon.

Accounting Principles Board. The profession’s response was to substitute, under its auspices, the Accounting Principles Board (APB) for the Committee on Accounting Procedure. This was done to facilitate the development of principles, which were to be based primarily on the research of a separate division of the AICPA, the Accounting Research Division. Under this strategy, the Division was to undertake extensive research, publish its findings, and then permit the Accounting Principles Board to take the lead in the discussions that would ensue concerning accounting principles and practices. The Board’s authority was enforced primarily through prestige and Rule 203 of the AICPA Code of Professional Conduct. Furthermore, formal approval of Board issuances by the Securities and Exchange Commission (SEC) gave additional support to its activities.

During the Board’s fourteen years of existence, it issued 31 authoritative opinions and 4 nonauthoritative statements. They dealt with amendments of Accounting Research Bulletins, opinions on the form and content of financial statements, and issuances requiring changes in both the recognition and disclosure principles of the profession. However, the Board did not make use of the efforts of the Accounting Research Division, which published fifteen research studies during its lifetime. Both the Board and the Division acted independently in selecting topics for their respective agendas. The Board issued pronouncements in areas where little research had been done, and the Division performed research studies without seeking to be all-inclusive or exhaustive in analysis. The Accounting Principles Board did not, ultimately, operate differently or more effectively than had the Committee on Accounting Procedure.