Slide 1Evolution of U.S. GAAPSlide 3FASB’s Accounting Standard CodificationBenefits of the ASCCodification generally didn’t change GAAPWhat is included in ASC?What you won’t findSlide 9ASU = accounting standards updateSlide 11Slide 12Standardized Section NumbersReferencing the “authoritative” guidance in the ASCSlide 16Slide 17Slide 18Let’s go to FASB.ORGResearch questionsResearch questionsResearch questionsResearching FASB’s ASCEffective for FS issued after 9/15/09The “codification” replaces previous standardsEvolution of U.S. GAAP1938CAPformed1959APBformed1973FASBformedCAPIssued51ARBsAPBIssued31OpinionsFASBIssued____Statements21 years 14 years36 years1685 to 6 per year2009Codification Effective 2009FASB’s Accounting Standard CodificationThe ASC is the single source of authoritative nongovernmental U.S. GAAP, except for SEC guidanceThe “GAAP Hierarchy” now has only 2 levels:Everything in ASC is “equally authoritative”If it isn’t in ASC, refer to textbooks, concept statements, industry practices, IFRS, etc.FASB Statement No. 168 made it “official” and is the “last ever” in the series – future changes will be made through “ASC Updates”Benefits of the ASCAll non-SEC authoritative guidance is now in one place!Updates and additions to guidance will be incorporated into appropriate topics instead of a new document number to add to the existing 168 standardsUsers can have more confidence that all authoritative guidance has been reviewed or considered in researching an accounting matterCodification generally didn’t change GAAPLanguage from the original pronouncements was edited for consistency and certain words were changed (for example, “should” and “must” were replaced with “shall”)Exception is software revenue recognition guidance from an AICPA Technical Inquiry Serivce (TIS) document which was not previously followed by some nonpublic companiesWhat is included in ASC?FASB Statements, Interpretations, Technical Bulletins, FSPs, EITFs, DIG and other implementation guidance, some older material from AICPA Committee on Accounting Procedures and Accounting Principles Board, AICPA SOPs, etc.Some SEC guidance is included for convenience but safer to check SEC.GOVWhat you won’t findFASB concept statementsGovernment accounting standardsGrandfathered materialStandards that were outdated or superseded as of December 31, 2008Guidance for non-GAAP matters such as cash or income tax basis accountingSome of the “basis for conclusion” materialPlace topic onagendaAppoint TaskForceConductResearchIssueDiscussionMemorandumHold publichearingAnalysis ofpublic responseIssue ExposureDraft of ASUHold PublicHearingsAnalysis ofpublic responseModify exposuredraftVote(approval requires 5 of 7)Issue AccountingStandard Update (ASU)Due Process in StandardSettingASU = accounting standards updateChanges to the codification are still being made16 ASUs issued in 200924 ASUs issued so far in 2010Multiple major topics are underway as part of convergence with IFRS includingLeasesRevenue recognitionFair value for financial instrumentsFinancial statement displayNOTHING IS MORE CERTAIN THAN CHANGE!Standardized Section NumbersReferencing the “authoritative” guidance in the ASCExamples from Grant ThorntonLet’s go to FASB.ORGResearch questions1. What is a leveraged lease?2. What is a “sale-leaseback” arrangement?3. In a sale-leaseback situation, how does one classify the lease for the lessee?Research questions4. A company is leasing real estate with the following fair values:Land $400,000Building $800,000The terms of the lease permit the lessee to acquire the property at the end of the 20-year lease for $300,000. The annual payments will be $139,724. How will the lessee go about classifying this lease?Step 1 – FIND the material!Research questions4. A company is leasing real estate with the following fair values:Land $400,000Building $800,000The terms of the lease permit the lessee to acquire the property at the end of the 20-year lease for $300,000. The annual payments will be $139,724. How will the lessee go about classifying this lease?Step 2 – APPLY standard to the
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