Financial Accounting Standards Codification

Question 1

Codification

Answer 1

• compilation and reorganization of all GAAP sources

- organized on major area and topic

Question 2

Goals of codification

Answer 2

online real-time searchable database in order to:

1) simplify structure and accessibility of GAAP
2) place authoritative literature in one place
3) reduce the time and effort to research the issue
4) reduce the risk of noncompliance with GAAP
5) facilitate updating GAAP
6) assist with IFRS convergence

Question 3

Codification Structure

Answer 3

Areas
Topics
Subtopics
Sections 
Subsections
Paragraphs

Question 4

Areas

Answer 4

General- 100 principle (eg. objective of financial reporting), 200 presentation (eg. b/s)

Balance Sheet- 300 assets (cash) , 400 liabilities (debit), 500 equity (treasury stock)

Income Statement- 600 Revenue (products), 700 Expenses (startup costs)

Other- 800 broad transactions (business combinations) 900 industry (agriculture)

Question 5

Topics

Answer 5

each area has a varying number of Topics
eg. Assets have a topic for cash, receivables, investments, inventory, intangibles, PPE since assets are 300 level then they will all be numbered from 300-399

Question 6

Subtopics

Answer 6

• one overall subtopic of each topic

eg. receivables has a subtopic on non refundable fees

Question 7

Section

Answer 7

each subtopic has 16 sections and the sections are uniform across all subtopics
-the 16 subsections has a numerical identifier

Question 8

Subsections and Paragraphs

Answer 8

-some sections are divided into subsections if needed

subsections are broken into paragraphs