Accounting Standards Codification: A Comprehensive Guide for Accountants, Assignments of Accounting

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Tina Skinner DeVry University ACCT Professional Research for Accountants Week 3 Team 2 Week 3 Homework Professor Nwaogu November 18, 2024

Week 3 Team 2 Week 3 Homework

1. a. Why was codification needed? Codification was needed to simplify access to the Accounting Standards Codification (ASC), improve research accuracy, mitigate non-compliance risk, streamline the research process, provide real-time updates, and assist with IFRS convergence (FASB, 2023; FASB, 2024). b. What is the goal of codification? Codification aims to provide a single, authoritative source for all U.S. accounting standards. By consolidating all relevant guidance into one document, it seeks to enhance clarity, comparability, and consistency in financial reporting. c. What authoritative literature does the codification supersede? The Codification superseded a wide range of authoritative literature, including FASB Standards, Interpretations, Staff Positions, Emerging Issues Task Force Abstracts, and certain positions from the American Institute of Certified Public Accountants (FASB,2009). It replaced all prior non-SEC accounting and reporting standards for nongovernmental entities, rendering other non-grandfathered, non-SEC accounting literature non-authoritative. d. How is the codification structured? The Codification is structured hierarchically with the following primary levels: o Topics : Represent significant subject areas within accounting, such as "Revenue Recognition." o Subtopics : Break down topics into specific areas for detailed guidance. o Sections : Provide specific rules and requirements within each subtopic. o Subsections : Offer additional details, addressing specific issues or concepts within sections.

Week 3 Team 2 Week 3 Homework b. Property, Plant, and Equipment i. How many results did you get? I got 163 results in four categories. ii. Click on 360 Property, Plant, and Equipment > 10 Overall > 30 Initial Measurement, and summarize what is said in subsection 30-1. Subsection 30-1 discusses the historical cost of acquiring an asset, which includes the purchase price and any additional costs essential for preparing the asset for its intended use regarding its physical condition and location. Suppose the asset requires a specific preparation period. In that case, interest costs incurred on funds used during that time are also included in the asset’s historical cost, ensuring it reflects the total financial commitment required to operationalize the asset (FASB, 2024). c. Loss Contingencies i. How many results did you get? I got 163 results in three categories. ii. Click on 450 Contingencies > 20 Loss Contingencies > 25 Recognition and summarize how to account for loss contingencies. To account for loss contingencies, an estimated loss should be accrued as an expense if: (1) evidence before issuing financial statements indicates it is probable a loss occurred as of the statement date, and (2) the loss amount can be reasonably estimated. Disclosure is recommended rather than accrual if a loss is probable but cannot be estimated. Also, even if a loss is estimable, it should not be accrued for future periods rather than the current or prior period. The FASB provides examples to clarify these guidelines (FASB, 2024).

Week 3 Team 2 Week 3 Homework Reference FASB. (2009). ASB Accounting Standards CodificationTM https://www.fasb.org/page/getarticle? uid=fasb_NEWS_RELEASE_12_04_08Body_ FASB. (2023). About the Codification. https://asc.fasb.org/layoutComponents/getPdf? isSitesBucket=true&fileName=FASB_About_the_Codification.pdf FASB. (2024). FASB: Financial Accounting Standards Board. Fasb.org. https://fasb.org FASB. (2024). Accounting Standards Codification. https://asc.fasb.org FASB. (2024). ASC 360: Property, Plant, and Equipment. https://asc.fasb.org/1943274/2147477647/932-360-05- FASB. (2024). ASC 450: Contingencies. https://asc.fasb.org/1943274/2147482952/450-10-05- FASB. (2024). ASC 605: Revenue Recognition. https://asc.fasb.org/1943274/2147481255/605-10-05- FASB ASC 605-20-25-6 Revenue Recognition - Services – Recognition https://asc.fasb.org/Home FASB ASC 360-10-30-6 Property, Plant, and Equipment https://asc.fasb.org/Home FASB ASC 450-20-25 Loss Contingencies https://asc.fasb.org/Home