week 3 assignment

ACCT 540

Week 3 Assignment

1(a). Codification was needed in order to simplify access for all of the authoritative generally accepted accounting principles that are recognized by the FASB. It combines all of the principles into one source.

1(b). Three main goals of the FASB Codification are:

· To combine all of the authoritative generally accepted accounting principles into one spot in order to simplify access

· To guarantee that the content in the codification is accurate and clearly represents the generally accepted accounting principles as of July 1, 2009

· To establish an efficient research system that stays current with the newly released standards

1(c). The FASB Codification supersedes the US Generally Accepted Accounting Principles.

1(d). The structure of the Codification begins with the main topics: General Principles, Presentation, Financial Statement Accounts, Broad Transactions, and Industries. Each of these topics is expanded further into subtopics, sections, and subsections. Each topic, subtopic, section and subsection is then assigned a code depending on how the particular subject is organized. Coding numbers 1 through 99 are reserved for certain subjects that require extra refinement.

1(e). Each topic, subtopic, section and subsection is assigned a code depending on how the particular subject is organized. The numbers in the code that appear first relate to the topic, then the next two numbers relate to the subtopic, and the third set of numbers relate to the section. For example, the assigned code will appear as XXX-YY-ZZ, where the XXX relates to the topic, the YY relates to the subtopic, and the ZZ relates to the section. Coding numbers 1 through 99 are reserved for certain subjects that require extra refinement.

1(f). In the Codification, each area, topic, subtopic, and section has its own page. These pages are typically referred to as landing pages. Any user can easily navigate the Codification content by clicking the links on each landing page that take you to the pages you want to go to. The landing pages for area, topic, and subtopic only display a linked table of contents. The landing pages for sections are the only ones that actually contain Codification content.

1(g). The landing page for a general topic displays all of the subtopics in a collapsible table of contents. Contrasting the general topic landing page, the industry topic landing page shows the list of subtopics under the industry topic and the ability to join all subtopics. The subtopic landing page is similar to the general topic landing page, except that the table of contents shows a list of sections under the subtopic.

1(h). If an individual comes across “pending content” while looking through the Codification, this means that the content that is considered pending is not yet in effect. We do not know when the content will become effective, and the FASB classifies the information as pending content until it becomes effective. There will typically be a link next to the pending content that will determine whether or not the content applies to you. If a new standard is issued that is not effective for all registrants, then this information will ne classified as pending.

1(i). The SEC has allotted to the FASB a majority of the responsibility of setting accounting standards. However, the SEC remains an oversight function: it recognizes certain accounting principles that are relevant to the filings with the SEC. Because the SEC monitors the FASB, the SEC is capable of overruling the FASB’s activities. The Codification provides a limited amount of SEC content, of which is located in a separate part of the Codification from the FASB sources.

2(a) Warranty expense

i. 26

ii. Anyone who sells extended warranties is bound by a contract to perform services to the buyer throughout the duration of the contract. Thus, revenue is accrued and should be recognized over the period that the seller provides the services. The accrued revenue should be recognized on a straight-line basis, unless it is obvious that the services provided are not incurred in a straight-line manner.

2(b) Property, plant and equipment

i. 210

ii. Property, plant and equipment that is tangible should be separated from that which is intangible. This way, original costs and adjustments will be shown separately

2(c) Extinguishments of liabilities

i. 34

ii. This subsection includes amendments to an Accounting Standards Update that were constructed to improve financial reporting by requiring enhanced disclosures regarding the risks that occur when there are frequent transfers of financial assets. The requirements explained in these amendments will also help to clarify the disclosures and improve consistency in the process of transferring financial assets.

References

FASB Accounting Standards Codification: About the Codification (v. 4.10). (2014,

December 1). Retrieved July 24, 2015, from https://asc.fasb.org/cs/ContentServer?site=FAF&c=Document_C&sitepfx=FAF&pagename=FAF/Document_C/CodDocumentPage&cid=1176159857344

(n.d.). Retrieved July 25, 2015, from

https://asc.fasb.org/help&cid=1176153627761