Cpa Far 1 Accounting Standards

Front 1

Which entities determined GAAP?
Since 1934
1939 until 1959
1959 until 1973
1973 until 2009

Back 1

1934 -SEC (Securities and Exchange Commission) legal authority to establish US GAAP.

1959 until 1973 - APB (Accounting Principles Board)

1973 until 2009 - (FASB) Financial Accounting Standards Board


1939 until 1959 - CAP (Committe on Accounting Procedures of AICPA)

Front 2

Effective July 1, 2009

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FASB Accounting Standards Codification became the single source of authoritative nongovernment US GAAP....Accounting and financial reporting practices not included in the Codification are not GAAP.

Front 3

Authoritative Literature Included in the Codification (7) various standard setters

Back 3

FEDPRIA..
F- FASB (Financial Accounting Standards Board)

E - EITF (Emerging Issues Task Force)

D - Derivative Implementation Group Issues

P - Accounting Principles Board Opinion

R - Accounting Research Bulletins

I - Accounting Interpretations

A - AICPA (American Institute of Certified Publid Accountants

Front 4

FASB (6) codification literature

Back 4

FASB (6) codification literature

1. Statement of Financial Accounting Standards
2. Interpretations
3. Technical Bulletins
4. Staff Positions
5. Staff Implementation Guides
6. Statement No. 138 Examples

Front 5

AICPA (4) codification literature

Back 5

AICPA (4) codification literature

1. Statements of Position
2. Auditing and Accounting Guides (Incremental Acctg guidance only)
3. Practice Bulletins
4. Technical Inquiry Service (for software revenue recognition)

Front 6

SEC Standards included in the codification (6)

Back 6

SEC Standards included in the codification (6)

1. Regulation S-X
2. (FRR) - Financial Reporting Releases
3. (ASR) Accounting Series Releases
4. (IR) Interpretative Releases
5. (SAB) Staff Accounting Bulletin
6, EITF Topic D and SEC Staff Observer comments

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FASB updates the Accounting Standards Codification for new US GAAP issued and for amendments to the SEC content

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FASB amendments are issued for public comment in the form of Exposure Drafts.

Front 8

A majority vote of 3 board members is required to approve an Exposure Draft for issuance.

Back 8

All new GAAP and SEC amendments are fully intergrated into the existing structure of the Codification.

Front 9

International Accounting Standards Committee (IASC) - 1973 until 2001

International Accounting Standards Board (IASB) - 2001

Intl Financial Reporting Interpretations Commitee(IFRIC)

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The purpose of the IASB is to develop a single set of high quality global accounting standards.

The IFRIC is appointed by the trustees of IASC foundation to assist the IASB in establishing and improving standards of financial accounting and reporting.

The IASB issues Intl Financial Reporting Standards (IFRS) and related documents.

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SFAC No. 1 - Objectives of Fin Reporting

Back 10

Focus on information needs of external users. Purpose of Financial reporting are for external users to disclose entity's performance.

Front 11

SFAC No. 2 - Qualitative Characteristics of Accounting information. Hierachy of Qualitative:

Back 11

BUDS

B- Benefits greater than cost to obtain and present the information

U - Understandability -reasonable amount of knowledge and amount of effort to study the information presented.

D - Decision Usefulness - Primary Relevance and Reliability (R&R)

S - Secondary Characteristics - Comparability and Consistency (C&C)

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Primary R&R - Relevance (3)

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Relevance (Passing Feels Terrific) - (PFT)
1. Predictive Value - evaluate events
2. Feedback Value - confirm prior
3. Timeliness - availability

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Primary R&R - Reliability (3)

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Reliability -Nobody Relies on Financials unless Verified. (NRFV)
1. Neutrality - free from bias
2 Representational Faithfulness - Not misleading
3. Verifiability - can be verified

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Secondary Characteristics (C&C)

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Secondary Characteristics (C&C)
1. Comparability - identify similarities/ differences in two sets of information (Ex. Apple vs. Microsoft)

2. Consistency - Ability to Compare one period to another. (Ex. Prior year vs Current year)

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SFAC No. 7 Using Cash Flow Information and Present Value in Accounting Measurements.
5 elements of PV

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5 elements of PV

1. Estimate of future cash flow
2. Expectations about timng variations of future cash flows
3. Time Value of money
4. The price for bearing uncertainty.
5. Other factors (liquidity issues/credit risk and market imperfections)

Front 16

Present Value Computations (2)

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Present Value Computations (2)

1. Traditional Approach - PV bonds, scheduled known payments

2. Expected Cash Flow Approach ( PV warranties, uncertain future payments