...The financial accounting standards board (FASB) has developed a research tool to assist people in finding the correct guidelines and generally accepted accounting principles (GAAP) that apply to companies not ran by the government. [ (multiple, FASB Accounting Standards Codification, 2009) ] The Codification is to give up to date releases of standard-setting activity, ensure accurate codified material, and simply access of all authoritative US GAAP into one centralized location. The Codification does not have standards for state and local governments just standards set by the FASB, EIT, APB and AICPA to name a few standard setters. The SEC is included in the Codification standards, but just the technical information and not the entire rules, regulations or interpretive releases. Grandfathered content is excluded from the Codification. This would include information about pensions, business combinations and income taxes. The Codification is broken down into five main sections with multiple subsections. These sections are topics, subtopics, section, paragraphs, and subparagraphs. This use of a well organized approach to sorting and combining accounting standards and literature has made the Codification a primary resource for entities and other users alike. Comprehensive income is defined as “the change in equity (net assets) of a business entity during a period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during...
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...Chapter 6 Property and Equipment and Other Assets Overview 6.01 Health care entities use various kinds of property and equipment. Those assets are generally significant to the financial position of institutional health care entities, such as hospitals and nursing homes. Typical accounts used to record property and equipment transactions are land, land improvements, buildings and improvements, leasehold improvements, equipment (fixed and movable), leased property and equipment, accumulated depreciation and amortization, and construction in progress. Health care entities also have intangible assets, which may be acquired in connection with business combinations or purchases, or developed from other resources of the entity. Intangibles with finite lives are amortized according to their useful life. Examples of intangibles include: Health Plans customer relationships, such as employer groups or members provider networks trademarks trade names software licenses favorable leases non-compete agreements goodwill Hospitals and other health care facilities licenses certificates of need managed care contracts goodwill Physician practices medical charts non-compete agreements managed care contracts goodwill 6.02 6.03 Supplies inventories are generally not very significant to the financial position of health care entities. However, because of the volume and cost of supplies used, they may be much more significant to operating expenses and the statement of operations. Supplies typically...
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...whether to report the amounts borrowed and repaid on a net basis or on a gross basis. FASB’s Accounting Standards Codification 230-10-45-7 states “information about the gross amounts of cash receipts and cash payments during a period is more relevant than information about the net amounts of cash receipts and payments.” (FASB, ASC 230-10-45-7). However it is often enough to report the net amount of these cash receipts and payments. ASC 230-10-45-8 states that net presentation if appropriate when there is a quick turnover with large amounts and short maturities. Solution 1 — Classification with the Statement of Cash Flows Buck should present the borrowing and payment activity as a cash flow from financing activities. ASC 230-10-45-14 states that “proceeds from issuing bonds, mortgages, notes, and from other short- or long-term borrowing” are a cash inflow from financing activities. Similarly, ASC 230-10-45-15 states that “repayments of amounts borrowed” are a cash outflow for financing activities. For these reasons Buck should present the borrowing and payment activity related to its revolving line of credit as cash flows under financing activities. Solution 2 — Gross versus net presentation Scenario 1 The first case involves the $100 million borrowing capacity with all draws from the line of credit being due on demand. Buck...
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...crucial role in this process is the Rules of Procedures. The Rules of Procedure of the standards setting process describes the FASB’s operating procedures, and includes the due process activities that are to be open to public participation or observation to provide transparency into the standards-setting process. These rules set forth procedures followed by the FASB in establishing and improving standards of financial accounting and reporting for nongovernmental entities, including procedures related to the issuance of such standards and other communications. They also describe briefly the relationship of the FASB to the Foundation and its two advisory councils, the Financial Accounting Standards Advisory Council and the Private Company Council. The FASB is an independent, private-sector body created to serve an important public interest. Since 1973, it has been the designated organization in the private sector for establishing and improving standards of financial accounting and reporting that govern the preparation of financial reports by nongovernmental entities. The rules of procedure also describe the FASB mission, how the mission is accomplished, and the related principles that guide the Board’s standards-setting activities. It goes even further to explain the operating procedures of the FASB, including the...
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...Financial Accounting Standards Board The Financial Accounting Standards Board (FASB) has been the assigned organization in a private sector for establishing standards. These standards are important to be useful because it allows investors to make informed decisions. Financial information must be reliable, consistent and transparent. Since 1973, FASB has been part of a structure that’s independent of all other business and professional organizations. The rest of the parts are Financial Accounting Foundation (FAF), Financial Accounting Standards Advisory Council (FASAC), Governmental Accounting Standards Board (GASB) and Governmental Accounting Standards Advisory Council (GASAC). The role of monitoring and controlling business reporting and accounting practices in a modern organization is to establish and improve standards of financial accounting. FASB has a board full of members that participate in accomplishing the mission. There are 7 board members as well as several staff members that help assist. The board members are: * Russell Golden is a chairman. He began in July of 2013. He served six years as a staff member (technical Director) for the FASB before he got appointed to the chairmen. His term will end in 2017, but then he can get an appointment to an additional 3 more years. He is also chaired in FASB’S emerging issues task force. * James Kroeker is the vice chairman. He was appointed in September 2013. He served as the deputy managing partner for professional...
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...The Financial Accounting Standards Board (FASB) is an autonomous board composed of accounting professionals who establish and communicate financial accounting and reporting standards in the United States. The FASB was formed in 1973 to create standards in the interest of the public; including issuers, auditors, and users of financial information. The mission of the FASB is to create accounting and reporting standards that will provide decision-useful information to investors and other users of financial statements. Such standards are necessary for the efficient performance of the financial system as decisions regarding the distribution of capital rely on transparent, credible, and comprehensible information. If accounting standards failed to enforce these qualities in financial reports, it would be impossible to objectively evaluate financial information. Members of the FASB and staff are collectively experienced and knowledgeable in a range of areas including finance, accounting, and investing. The Foundation’s Board of Trustees appoints the seven full-time FASB members who may serve up to two terms of five years. The Board is backed by a staff of over sixty professionals who perform research and assist in many due process activities. According to the FASB website, the Board and staff members “each have a concern for investors, other users, and the public interest in matters of financial accounting and reporting.” An independent structure is necessary to ensure that private...
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...Part I: Know the FASB I. As discussed many times in ACC 310, the FASB is the current accounting standard setters in the U.S. as they are empowered by the SEC. Visit the FASB website at www.fasb.org and answer the following questions: (Do not cut and paste but answer in your own words. Any material quoted should be cited). 1. What is the FASB mission? 1pts The FASB mission is to establish and improve financial accounting standards and reporting. This sets the guidance for nongovernmental entities that provide decision-useful information to users. Users include issuers, auditors, and other users of financial information. 2. Who are the current FASB Board members and what are their backgrounds? 2pts a. Russel G. Golden, Chariman. Mr. Golden has an extensive background with the FASB holding different positions ranging from the FASB’s Emerging Issues Task Force, Technical Director of the FASB, and served 6 years as an FASB staff member. b. James L. Kroeker, Vice Chariman. Mr. Kroeker used to work for Deloitte as the Deputy Managing Partner for Profession Practice. He also worked for the Securities and Exchange Commission as the Chief Accountant. c. Daryl E. Buck, Board Member. Mr. Buck worked at Reasor’s Holding Company for 18 years. It is a privately-owned retail grocery company. d. Thomas J. Linsmeier, Board Member. Mr. Linsmeier was a professor at Michigan State University. He also worked for the...
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...accounting theory. Historical development of accounting standards. Authoritative pronouncements and standards-setting bodies. Questions 1 2, 3, 4 5, 6, 7, 8 Cases 1 3, 4 2, 4 4. 8, 9, 10, 11, 12 5, 17 5. 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 23, 24, 25, 26, 27 28 29 6, 7, 8, 10, 11, 12, 13, 15, 16 6. 7. 8. Role of pressure groups. International accounting. Ethical issues. 9, 18, 19 15 14 1-1 ASSIGNMENT CHARACTERISTICS TABLE Item C1-1 C1-2 C1-3 C1-4 C1-5 C1-6 C1-7 C1-8 C1-9 C1-10 C1-11 C1-12 C1-13 C1-14 C1-15 C1-16 C1-17 C1-18 C1-19 Description Financial accounting. Objectives of financial reporting. Accounting numbers and the environment. Need for accounting standards. AICPA’s role in standards setting. FASB role in standards setting. Government role in standards setting. Meaning of generally accepted accounting principles. Politicalization of standards setting. Models for setting accounting standards. Standards-setting terminology. Accounting organizations and documents issued. Accounting pronouncements. Issues involving standards setting. Securities and Exchange Commission. Standards-setting process. History of standards-setting organizations. Economic Consequences. Standards-setting process, economic consequences. Level of Difficulty Simple Moderate Simple Simple Simple Simple Simple Moderate Complex Simple Moderate Simple Simple Complex Moderate Moderate Moderate Moderate Moderate Time (minutes) 15-20 20-25 10-15 15-20 20-25 20-25 10-15 20-25...
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...interested parties wishing to comment on the Exposure Draft must be received in writing by July 16, 2010. Interested parties should submit their comments by email to director@fasb.org, File Reference No. 1770-100. Those without email may send their comments to the “Technical Director, File Reference No. 1770-100, FASB, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116.” Do not send responses by fax. Please send only one comment letter to either the FASB or the International Accounting Standards Board (IASB), which is also requesting comments on this jointly issued Exposure Draft. The FASB and the IASB will share and consider jointly all comment letters received. Comments are most helpful if they: a. b. c. Indicate the specific paragraph or paragraphs to which the comments relate Contain a clear rationale Include any alternative the Boards should consider. All comments received constitute part of the FASB’s public file. The FASB will make all comments publicly available by posting them to its website and by making them available in its public reference room in Norwalk, Connecticut. An electronic copy of this Exposure Draft is available on the FASB’s website until the FASB issues a final document. Copyright © 2010 by Financial Accounting Foundation. All rights reserved. Permission is granted to make copies of this work provided that such copies are for personal or intraorganizational use only and are not sold or disseminated and provided further that each copy bears the...
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...25, 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment. The ASU will require organizations that lease assets—referred to as “lessees”—to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The accounting by organizations that own the assets leased by the lessee—also known as lessor accounting— will remain largely unchanged from current Generally Accepted Accounting Principles (GAAP) (Topic 840 in the Accounting Standards Codification). “The new guidance responds to requests from investors and other financial statement users for a more faithful representation of an organization’s leasing activities,” stated FASB Chair Russell G. Golden. “It ends what the U.S. Securities and Exchange Commission and other stakeholders have identified as one of the largest forms of offbalance sheet accounting, while requiring more disclosures related to leasing transactions. “The guidance also reflects the input we received during our extensive outreach with preparers, auditors, and other practitioners, whose feedback was instrumental in helping us develop a cost-effective, operational standard,” added Mr. Golden. Why Did the FASB Embark on a Project to Improve Financial Reporting...
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...Governmental and Nonprofit Accounting: Theory and Practice, 10e (Freeman) Chapter 1 Governmental and Nonprofit Accounting—Environment and Characteristics 1. Which of the following would not be considered a government or nonprofit organization? A. A software company that sells software exclusively to state and local governments. B. A public elementary school. C. A church. D. A private trust organized for charitable purposes. (Answer: A; Easy; LO1) 2. Which of the following activities would most likely be accounted for as a business-type activity? A. Fire protection. B. Recreation. C. Water operations. D. Street maintenance. (Answer: C; Moderate; LO1) 3. Prior to the creation of the Governmental Accounting Standards Board in 1984, which of the following organizations had the greatest influence over accounting concepts, principles, and standards for the state and local governments? A. The National Council on Governmental Accounting (NCGA) B. The National Association of College and University Business Officers (NACUBO). C. The American Institute of Certified Public Accountants (AICPA). D. The Comptroller General of the United States. (Answer: A; Moderate; LO1) 4. Which of the following is considered a health and welfare organization? A. Secondary schools. B. Young Men’s Christian Association (YMCA). C. Child protection agencies. D. United Way. (Answer: C; Easy; LO2) 5. Which of the...
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...release of a May 26, 2011 Staff Paper, the SEC is now providing more direct insight into some more innovative thinking regarding the future of IFRS in the U.S. This staff paper, entitled Exploring a Possible Method of Incorporation, outlines one of several possible approaches to the use of IFRS in the U.S. Additional staff papers are expected in the coming weeks. This first paper explores an approach that has become known as “condorsement.” During the 2010 AICPA National Conference on Current SEC and PCAOB Developments, SEC Deputy Chief Accountant Paul Beswick introduced the term “condorsement” while discussing the possible use of IFRS in the U.S. In an April 4 interview with the Journal of Accountancy, Leslie Seidman, Chairman of the FASB, described her interpretation of condorsement...
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...Executive Memo to the Board To: Board of Directors From: UoPx CPA Auditors Subject: GAAP Requirements and Accounting Treatment for Share-Based Payment Reporting and Consolidation of Special Purpose Entity Week 6 Points to consider Memo on SPE and Share-based payments Evaluate Share-based payment reporting JJH->Share-based employee compensation awards are classified as either equity instruments or liability instruments. The measurement date for estimating the fair value of equity instruments is the grant date; the measurement date for liability instruments is the settlement date. Different rules also apply to public vs. private companies depending on the type of award instrument. (Executive summary, Paragraph 2) http://www.journalofaccountancy.com/Issues/2007/Apr/ARoadMapForShareBasedCompensation.htm Three features to help identify a share based transaction with employee program: 1. Employees that are shareholders are granted additional benefits Additional benefits indicate the entity is dealing with the individuals as employees or providers of services rather than as investors or equity holders. Examples of additional benefits include: • Employees have the right to additional shares if the business performs well (often referred to as a ratchet mechanism). • Employees’ rights depend on whether the entity floats or is sold through a trade sale (ie, in the event of a trade sale an employee may automatically get a cash payment...
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...buck should present the borrowing and payment activity related to its revolving line of credit as cash flows from financing activity. According to the 2301045, the definition of financing activities is that “ Financing activities include obtaining resources from owners and providing them with a return on, and a return of, their investment; receiving restricted resources that by donor stipulation must be used for longterm purposes; borrowing money and repaying amounts borrowed, or otherwise settling the obligation; and obtaining and paying for other resources obtained from creditors on longterm credit”( FASB Accounting Standard codification, 2301045). As it also mentioned in FASB Accounting Standard Codification 230104514 and 230104515, then, “Proceeds from issuing bonds, mortgages, notes, and from other shortor longterm borrowing” and “payments of dividends or other distributions to owners, including outlays to reacquire the entity's equity instruments” are cash flows for financing activities. Therefore, Buck should present the borrowing and payment activities related to its revolving line of credit as cash flow from financing activities. Part 2 In scenario 1 (net), all the borrowing and payment activities are based on net basis within the financing activities section of its statement of cash flows. As FASB ASC 23010459 indicates “amounts due on demand are considered to have maturities of three months or less.” Here the situation is all draws are considered...
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...budgets are prepared on a cash or modified cash basis. 4. Neither the GASB nor the FASB sets standards for budgetary accounting. 5. State and local governments must prepare their GAAP budgetary comparisons on the modified accrual basis of accounting. 6. When budgets are integrated into a government’s accounting system, estimated revenues are debited. 7. Encumbrances and expenditures both reduce total fund balances of state and local governments. 8. Not-for-profit budgets focus first on revenues and secondarily on expenditures. 9. State and local governments’ budget-to-actual comparisons present both original and final budget amounts. 10. Cash-basis budgets help governments focus on interperiod equity. 11. Reserve for encumbrances accounts should be closed at year-end. 12. Capital budgets concentrate on long-lived assets Chapter 12 1. FASB Statement No. 117 directs that revenues and expenses be reported in a statement of financial position. 2. In the statement of activities, FASB Statement No. 117 requires revenues to be reported as increases in one of the three categories of net assets, depending on donor-imposed restrictions; however, all expenses should be reported as decreases in unrestricted net assets. 3. Restricted contributions may be reported as unrestricted if the restriction has been met in the same period as the contribution is made. 4. FASB Statement No. 95 requires not-for-profits to use the direct method in their statements...
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