Intermediate Accounting Research Assignment Questions
Directions: Type your answer starting on the line after each question.
1. FASB Accounting Standards Codification FASC
a. When did the FASC Codification become effective?
According to the Notice to Constituents (v4.7), the FASC Codification was released on July 1, 2009 and became effective for interim and annual periods ending after September 15, 2009.
b. Did the FASC change prior GAAP?
According to the Notice to Constituents (v4.7), the FASC superseded all previous level (a)-(d) US GAAP (refers to the previous accounting hierarchy) standards by a standard setter. This means that all other accounting literature not included in the Codification is non-authoritative.
c. What does the FASB expect from the new FASC structure and system?
According to the Notice to Constituents (v4.7), the FASB expects the new FASC structure and system to reduce the amount of time and effort required to solve an accounting research issue, mitigate the risk of noncompliance through improved usability of the literature, provide accurate information with real-time updates as Accounting Standards Updates are released, and assist the FASB with the research and convergence efforts, among other things.
d. What are the “topics” used in the ASC?
According to the Notice to Constituents (v4.7), the “topics” used in the ASC includes General Principles (Topic Codes 105-199), Presentation (Topic Codes 205-299), Assets (Topic Codes 305-399), Liabilities (Topic Codes 405-499), Equity (Topic Codes 505-599), Revenue (Topic Codes 605-699), Expenses (Topic Codes 705-799), Broad Transactions (Topic Codes 805-899), and Industry (Topic Codes 905-999).
e. Are SEC references included in the ASC?
SEC references are included in the ASC. According to the Notice to Constituents (v4.7), the ASC has included relevant portions of authoritative content issued by the SEC and selected SEC staff interpretations and administrative guidance for reference, such as Regulation S-X (SX), Financial Reporting Releases (FRR), Accounting Series Releases (ASR), Interpretive Releases (IR), SEC Staff guidance in Staff Accounting Bulletins (SAB), and EITF Topic D and SEC Staff Observer comments.
2. Transfer of Receivables FASC 860-10
Provide other examples (besides recourse and collateral) that qualify as continuing involvement.
According to Section 860-10-55-79B, aside from recourse and collateral, examples of continuing involvement include servicing arrangements, agreements to purchase or redeem transferred financial assets, options written or held, arrangements to provide financial support, the transferor’s beneficial interests in the transferred financial assets, and derivative instruments that are entered into contemporaneously with, or in contemplation of, the transfer.
3. Inventories FASC 330-10
Identify the primary authoritative guidance for the accounting for inventories.
Section 330-10 is the primary authoritative guidance for the accounting for inventories.
List three types of goods that are classified as inventory. What characteristic will automatically exclude an item from being classified as inventory?
According to Section 330-10-20 Glossary (Inventory definition), the three types of goods classified as inventory include goods awaiting sale, goods in the course of production, and goods to be consumed directly or indirectly in production.
An asset or item subject to depreciation will automatically be excluded and should not be classified as inventory.
Define “market” as used in the phrase “lower-of-cost-or-market.”
Section 330-10-20 Glossary defines “market” as used in the phrase lower of cost or market, as the current replacement cost, by purchase or by reproduction, provided that it meets both of the following conditions: market shall not exceed the net realizable value, and market shall not be less...
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