FASB Codification System defined
The FASB Accounting Standards Codification refers to the source of authoritatively accepted principles acknowledged by the FASB to be used to non-governmental firms. The Codification is operative for annual and interim durations concluding after September 15, 2009. Essentially, all previous degree (a)-(d) US GAAP regulations provided by a standard setter are outdated. Level (a)-(d) US GAAP illustrates the previous accounting ladder. All other accounting writings not incorporated in the Codification will be deemed non-authoritative ( Brenner & Watkins, 2012). Primarily, the Codification is due to a major 5-year project incorporating over 200 people from numerous firms. The Codification organization is predominantly distinct from the organization of preceding standards. The codification research site is an advanced application permitting constituents to view Codification information, conduct search and provide feedback ( Pounder, 2008). Additionally, the Codification research framework permits end users to view data in various different models such as browsing by Topic, merging correlated content, as well as probing among them.
FASB Codification System Goals
The FASB initially had three major objectives in advancing the Codification namely simplification of user access by collating all commanding US GAAP in a sole spot, guarantee that the collected information precisely illustrated authoritative US GAAP effective July 2009 and finally develop a codification study framework that is updated for the released outcome of average-setting operations. Streamlining user access to all authoritative US GAAP necessitated an organizational overhaul that transformed from a standards-founded method with many personal standards to a topically founded system with about 90 topics ( Brenner & Watkins, 2012) . Standards require the Codification not to codify non-authoritative US GAAP including practice, articles, textbooks, as well as other similar material. Among other purposed, the Codification is anticipated to:
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Decrease the amount of effort and time needed to crack an accounting research problem
Alleviate the risk of nonconformity through advanced usability of the writings
Provide correct data with real-time apprises as Accounting Standards Updates are at large ( Pounder, 2008).
Support the FASB with the study and joining attempts.
Content Areas
The nine content areas found in the FASB Codification System include:
Assets: Under this category, there are Codification standards regarding cash and cash equivalents, receivables, investments in form of equity and debt securities, equity securities, equity method and joint ventures, financial instruments such as credit losses, inventory, deferred costs, intangible in form of goodwill, as well as property, plant and equipment ( Brenner & Watkins, 2012).
Broad Transactions among other items include consolidation, collaborative arrangements, hedging and derivatives, interest, leases, matters foreign currency, transfer and servicing, and reorganizations ( Pounder, 2008).
Equity involves matters to deal with owners’ capital such as retained earnings and shareholders’ equity.
Expenses: Cost of disposals and services, recompense, retirement welfares, inventory compensation, research and expansion, income taxes and non-retirement post-employment benefits.
General Principles: The generally accepted accounting principles (GAAPs) are found under this category.
Industry: This category presents codification information about general agriculture, entertainment, construction, mining, financial services in form of dealers and brokers, insurance and insurance companies, mortgage and banking, franchisors, and health care firms.
Liabilities include environmental obligations and asset retirement, commitments, guarantees, debt, contingencies, debt, deferred revenue among other items ( Brenner & Watkins, 2012).
Presentation: Here there is information concerning the statement of financial position, comprehensive income, statement of financial performance, statement of owner equity, cash flow statement, earnings per share, interim reporting among other presentation statement ( Pounder, 2008).
Revenue involves revenue recognition, profit from contracts with clients and all other incomes for a business.
References
Brenner, V. C., & Watkins, A. L. (2012). Introducing students to the FASB Codification System. The Accounting Educators' Journal , 21 (1).
Pounder, B. (2008). Framing the Future: A First Look at FASB's GAAP Codification. Journal of Accountancy , 205 (5), 40.
