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This edition first published 2016
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ISBN 978-1-119-10606-7 (paperback)
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Wiley GAAP 2016: Interpretation and Application provides analytical explanations, copious illustrations, and nearly 300 examples of all current generally accepted accounting principles. The book integrates principles promulgated by the FASB in its Accounting Standards Codification.TM
This edition of Wiley GAAP is organized to align fully with the structure of the FASB Codification. Each chapter now begins with a list of the Subtopics included within the Topic, major scope and scope exceptions, technical alerts of FASB Updates, and an overview of the Topic. The remainder of each chapter contains a detailed discussion of the concepts and practical examples and illustrations. This organization facilitates the primary objective of the book—to assist financial statement preparers and practitioners in resolving the myriad practical problems faced in applying GAAP.
Meaningful, realistic examples abound, guiding users in the application of GAAP to complex fact situations that must be dealt with in the real world practice of accounting. In addition to this emphasis, a major strength of the book is that it explains the theory of GAAP in sufficient detail to serve as a valuable adjunct to accounting textbooks. Much more than merely a reiteration of currently promulgated GAAP, it provides the user with the underlying conceptual bases for the rules. It facilitates the process of reasoning by analogy that is so necessary in dealing with the complicated, fast-changing world of commercial arrangements and transaction structures. It is based on the author's belief that proper application of GAAP demands an understanding of the logical underpinnings of all its technical requirements.
As a bonus, a comprehensive disclosure checklist, following the main text, offers practical guidance to preparing financial statements for commercial entities in accordance with GAAP. For easy reference and research, the checklist follows the order of the codification.
The following FASB Accounting Standards Updates were issued through May 2015 and since the Wiley GAAP 2015. Their requirements are incorporated in this edition of Wiley GAAP, as and where appropriate and at a minimum in the Technical Alert section at the beginning of the Topic referenced in the ASU title. Note that information on ASU 2014-09 is included as an appendix to the chapter on ASC 605.
Significant accounting changes are on the horizon. In the next year, the FASB is expected to make strides on the following major projects and others:
Readers are encouraged to check the FASB website for status updates to the above and other FASB projects.
In response to the 2011 report of the Blue Ribbon Panel on Standard Setting for Private Companies, the AICPA and the FASB began separate initiatives. In July 2013, the AICPA released its Financial Reporting Framework for Small- and Medium-sized Entities. The AICPA has positioned the Framework as an alternative to U.S. GAAP and one that will provide consistent, reliable information for small- and medium-sized entities that are not required to prepare financial statements in accordance with U.S. GAAP. The FASB created the Private Company Council to address the Blue Ribbon Panel's report. The FASB issued a framework for the FASB and the PCC to use in determining whether alternatives to existing and proposed U.S. GAAP are warranted for private companies. In 2014, FASB issued three ASUs that are consensuses of the PCC. Those are listed on the table above.
The author's wish is that this book will serve preparers, practitioners, faculty, and students, as a reliable reference tool to facilitate their understanding of, and ability to apply, the complexities of the authoritative literature.
Joanne M. Flood
June 2015
Joanne M. Flood, CPA, is an author and independent consultant on accounting and auditing technical topics and e-learning. She has experience as an auditor in both an international firm and a local firm and worked as a senior manager in the AICPA's Professional Development group. She received her MBA Summa Cum Laude in Accounting from Adelphi University and her Bachelor's degree in English from Molloy College.
While in public accounting, Joanne worked on major clients in retail, manufacturing, and finance and on small business clients in construction, manufacturing, and professional services. At the AICPA, Joanne developed and wrote e-learning, text, and instructor-led training courses on U.S. and International Standards. She also produced training materials in a wide variety of media, including print, video, and audio, and pioneered the AICPA's e-learning product line. Joanne resides on Long Island, New York with her daughter, Elizabeth. Joanne is the author of several articles for and contributor to Wiley Insight IFRS and the following Wiley publications:
And the following AICPA online and live CPE programs:
Topic # and title | Subtopic # and title | ||
I. General Principles and Objectives | |||
105 | Generally Accepted Accounting Principles | 105-10 | Overall |
II. Overall Financial Reporting, Presentation, and Display Matters | |||
A. Overall Presentation of Financial Statements | |||
205 | Presentation of Financial Statements | 205-10 | Overall |
205-20 | Discontinued Operations | ||
205-30 | Liquidation Basis of Accounting | ||
205-40 | Going Concern | ||
210 | Balance Sheet | 210-10 | Overall |
210-20 | Offsetting | ||
215 | Statement of Shareholders' Equity | 215-10 | Overall |
220 | Comprehensive Income | 220-10 | Overall |
225 | Income Statement | 225-10 | Overall |
225-20 | Extraordinary and Unusual Items | ||
225-30 | Business Interruption Insurance | ||
230 | Statement of Cash Flows | 230-10 | Overall |
235 | Notes to Financial Statements | 235-10 | Overall |
B. Various Financial Reporting, Presentation, and Display Matters | |||
250 | Accounting Changes and Error Corrections | 250-10 | Overall |
255 | Changing Prices | 255-10 | Overall |
260 | Earnings Per Share | 260-10 | Overall |
270 | Interim Reporting | 270-10 | Overall |
270-40 | Income Taxes | ||
272 | Limited Liability Entities | 272-10 | Overall |
274 | Personal Financial Statements | 274-10 | Overall |
275 | Risks and Uncertainties | 275-10 | Overall |
280 | Segment Reporting | 280-10 | Overall |
III. Transaction-Related Topics | |||
A. Financial Statement Accounts | |||
305 | Cash and Cash Equivalents | 305-10 | Overall |
310 | Receivables | 310-10 | Overall |
310-20 | Nonrefundable Fees and Other Costs | ||
310-30 | Loans and Debt Securities Acquired with Deteriorated Credit Quality | ||
310-40 | Troubled Debt Restructurings by Creditors | ||
320 | Investments—Debt and Equity Securities | 320-10 | Overall |
323 | Investments—Equity Method and Joint Ventures | 323-10 | Overall |
323-30 | Partnerships, Joint Ventures, and Limited Liability Entities | ||
325 | Investments—Other | 325-10 | Overall |
325-20 | Cost Method Investments | ||
325-30 | Investments in Insurance Contracts | ||
325-40 | Beneficial Interests in Securitized Financial Assets | ||
330 | Inventory | 330-10 | Overall |
340 | Other Assets and Deferred Costs | 340-10 | Overall |
340-20 | Capitalized Advertising Costs | ||
340-30 | Insurance Contracts that Do Not Transfer Insurance Risk | ||
340-40 | Contracts with Customers | ||
350 | Intangibles—Goodwill and Other | 350-10 | Overall |
350-20 | Goodwill | ||
350-30 | General Intangibles Other Than Goodwill | ||
350-40 | Internal-Use Software | ||
350-50 | Web Site Development Costs | ||
360 | Property, Plant, and Equipment | 360-10 | Overall |
360-20 | Real Estate Sales | ||
405 | Liabilities | 405-10 | Overall |
405-20 | Extinguishment of Liabilities | ||
405-30 | Insurance-Related Assessments | ||
405-40 | Obligations Resulting from Joint and Several Liabilities | ||
410 | Asset Retirement and Environmental Obligations | 410-10 | Overall |
410-20 | Asset Retirement Obligations | ||
410-30 | Environmental Obligations | ||
420 | Exit or Disposal Cost Obligations | 420-10 | Overall |
430 | Deferred Revenue | 430-10 | Overall |
440 | Commitments | 440-10 | Overall |
450 | Contingencies | 450-10 | Overall |
450-20 | Loss Contingencies | ||
450-30 | Gain Contingencies | ||
460 | Guarantees | 460-10 | Overall |
470 | Debt | 470-10 | Overall |
470-20 | Debt with Conversion and Other Options | ||
470-30 | Participating Mortgage Loans | ||
470-40 | Product Financing Arrangements | ||
470-50 | Modifications and Extinguishments | ||
470-60 | Troubled Debt Restructurings by Debtors | ||
480 | Distinguishing Liabilities from Equity | 480-10 | Overall |
505 | Equity | 505-10 | Overall |
505-20 | Stock Dividends and Stock Splits | ||
505-30 | Treasury Stock | ||
505-50 | Equity-Based Payments to Non-Employees | ||
505-60 | Spin-offs and Reverse Spin-offs | ||
605 | Revenue Recognition | 605-10 | Overall |
605-15 | Products | ||
605-20 | Services | ||
605-25 | Multiple-Element Arrangements | ||
605-28 | Milestone Method | ||
605-30 | Rights to Use | ||
605-35 | Construction-Type and Production-Type Contracts | ||
605-40 | Gains and Losses | ||
605-45 | Principal–Agent Considerations | ||
605-50 | Customer Payments and Incentives | ||
606 | Revenue from Contracts with Customers | 606-10 | Overall1 |
610 | Other Income | 610-10 | Overall1 |
610-20 | Gains and Losses from the Derecognition of Nonfinancial Assets | ||
610-30 | Gains and Losses on Involuntary Conversions | ||
705 | Cost of Sales and Services | 705-10 | Overall |
705-20 | Accounting for Consideration Received from a Vendor1 | ||
710 | Compensation—General | 710-10 | Overall |
712 | Compensation—Nonretirement Postemployment Benefits | 712-10 | Overall |
715 | Compensation—Retirement Benefits | 715-10 | Overall |
715-20 | Defined Benefit Plans—General | ||
715-30 | Defined Benefit Plans—Pensions | ||
715-60 | Defined Benefit Plans—Other Postretirement | ||
715-70 | Defined Contribution Plans | ||
715-80 | Multiemployer Plans | ||
718 | Compensation—Stock Compensation | 718-10 | Overall |
718-20 | Awards Classified as Equity | ||
718-30 | Awards Classified as Liabilities | ||
718-40 | Employee Stock Ownership Plans | ||
718-50 | Employee Share Purchase Plans | ||
718-740 | Income Taxes | ||
720 | Other Expenses | 720-10 | Overall |
720-15 | Start-Up Costs | ||
720-20 | Insurance Costs | ||
720-25 | Contributions Made | ||
720-30 | Real and Personal Property Taxes | ||
720-35 | Advertising Costs | ||
720-40 | Electronic Equipment Waste Obligations | ||
720-45 | Business and Technology Reengineering | ||
720-50 | Fees Paid to the Federal Government by Pharmaceutical Manufacturers and Health Insurers | ||
730 | Research and Development | 730-10 | Overall |
730-20 | Research and Development Arrangements | ||
740 | Income Taxes | 740-10 | Overall |
740-20 | Intraperiod Tax Allocation | ||
740-30 | Other Considerations or Special Areas | ||
B. Broad Transactional Categories | |||
805 | Business Combinations | 805-10 | Overall |
805-20 | Identifiable Assets and Liabilities, and Any Noncontrolling Interest | ||
805-30 | Goodwill or Gain from Bargain Purchase, Including Consideration Transferred | ||
805-40 | Reverse Acquisitions | ||
805-50 | Related Issues | ||
805-740 | Income Taxes | ||
808 | Collaborative Arrangements | 808-10 | Overall |
810 | Consolidation | 810-10 | Overall |
810-20 | Control of Partnerships and Similar Entities | ||
810-30 | Research and Development Arrangements | ||
815 | Derivatives and Hedging | 815-10 | Overall |
815-15 | Embedded Derivatives | ||
815-20 | Hedging—General | ||
815-25 | Fair Value Hedges | ||
815-30 | Cash Flow Hedges | ||
815-35 | Net Investment Hedges | ||
815-40 | Contracts in Entity's Own Equity | ||
815-45 | Weather Derivatives | ||
820 | Fair Value Measurements | 820-10 | Overall |
825 | Financial Instruments | 825-10 | Overall |
825-20 | Registration Payment Arrangements | ||
830 | Foreign Currency Matters | 830-10 | Overall |
830-20 | Foreign Currency Transactions | ||
830-30 | Translation of Financial Statements | ||
830-230 | Statement of Cash Flows | ||
830-740 | Income Taxes | ||
835 | Interest | 835-10 | Overall |
835-20 | Capitalization of Interest | ||
835-30 | Imputation of Interest | ||
840 | Leases | 840-10 | Overall |
840-20 | Operating Leases | ||
840-30 | Capital Leases | ||
840-40 | Sale-Leaseback Transactions | ||
845 | Nonmonetary Transactions | 845-10 | Overall |
850 | Related-Party Disclosures | 850-10 | Overall |
852 | Reorganizations | 852-10 | Overall |
852-20 | Quasi-Reorganizations | ||
852-740 | Income Taxes | ||
853 | Service Concession Arrangements | 853-10 | Overall |
855 | Subsequent Events | 855-10 | Overall |
860 | Transfers and Servicing | 860-10 | Overall |
860-20 | Sales of Financial Assets | ||
860-30 | Secured Borrowings and Collateral | ||
860-40 | Transfers to Qualifying Special-Purpose Entities | ||
860-50 | Servicing Assets and Liabilities | ||
IV. Industry/Unique Topics | |||
905 | Agriculture | 905-10 | Overall |
908 | Airlines | 908-10 | Overall |
910 | Contractors—Construction | 910-10 | Overall |
910-20 | Contract Costs | ||
912 | Contractors—Federal Government | 912-10 | Overall |
912-20 | Contract Costs | ||
915 | Development Stage Entities | 915-10 | Overall |
920 | Entertainment—Broadcasters | 920-10 | Overall |
922 | Entertainment—Cable Television | 922-10 | Overall |
924 | Entertainment—Casinos | 924-10 | Overall |
926 | Entertainment—Films | 926-10 | Overall |
926-20 | Other Assets—Film Costs | ||
928 | Entertainment—Music | 928-10 | Overall |
930 | Extractive Activities—Mining | 930-10 | Overall |
932 | Extractive Activities—Oil and Gas | 932-10 | Overall |
940 | Financial Services—Brokers and Dealers | 940-10 | Overall |
940-20 | Broker Dealer Activities | ||
942 | Financial Services—Depository and Lending | 942-10 | Overall |
944 | Financial Services—Insurance | 944-10 | Overall |
944-20 | Insurance Activities | ||
944-30 | Acquisition Costs | ||
944-40 | Claim Costs and Liabilities for Future Policy Benefits | ||
944-50 | Policyholder Dividends | ||
944-60 | Premium Deficiency and Loss Recognition | ||
944-80 | Separate Accounts | ||
946 | Financial Services—Investment Companies | 946-10 | Overall |
946-20 | Investment Company Activities | ||
948 | Financial Services—Mortgage Banking | 948-10 | Overall |
950 | Financial Services—Title Plant | ||
952 | Franchisors | 952-10 | Overall |
954 | Health Care Entities | 954-10 | Overall |
958 | Not-for-Profit Entities | 958-10 | Overall |
958-20 | Financially Interrelated Entities | ||
958-30 | Split-Interest Arrangements | ||
960 | Plan Accounting—Defined Benefit Pension Plans | 960-10 | Overall |
960-20 | Accumulated Plan Benefits | ||
960-30 | Net Assets Available for Plan Benefits | ||
960-40 | Terminating Plans | ||
962 | Plan Accounting—Defined Contribution Pension Plans | 962-10 | Overall |
962-40 | Terminating Plans | ||
965 | Plan Accounting—Health and Welfare Benefit Plans | 965-10 | Overall |
965-20 | Net Assets Available for Plan Benefits | ||
965-30 | Plan Benefits Obligations | ||
965-40 | Terminating Plans | ||
970 | Real Estate—General | 970-10 | Overall |
972 | Real Estate—Common Interest Realty Associations | 972-10 | Overall |
974 | Real Estate—Real Estate Investment Trusts | 974-10 | Overall |
976 | Real Estate—Retail Land | 976-10 | Overall |
978 | Real Estate—Time-Sharing Activities | 978-10 | Overall |
980 | Regulated Operations | 980-10 | Overall |
980-20 | Discontinuation of Rate-Regulated Accounting | ||
985 | Software | 985-10 | Overall |
985-20 | Costs of Software to Be Sold, Leased, or Marketed | ||
995 | U.S. Steamship Entities | ||
V. Glossary |