GAAP 2017 Interpretation and Applicatrion of Generally Accepted Accounting Principles WILEY

WEBFFIRS 11/26/2016 17:5:34 Page i GAAP 2017 Interpretation and Application of GENERALLY ACCEPTED ACCOUNTING PRINCIPLES WEBFFIRS 11/26/2016 17:5:34 Page ii BECOME A SUBSCRIBER! Did you purchase this product from a bookstore? 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office nearest you: Professional & Reference Division John Wiley & Sons Canada, Ltd 22 Worcester Road Etobicoke, Ontario M9W 1L1 CANADA Phone: 416-236-4433 Phone: 1-800-567-4797 Fax: 416-236-4447 Email: canada@jwiley.com John Wiley & Sons, Ltd The Atrium Southern Gate, Chichester West Sussex, PO19 8SQ ENGLAND Phone: 44-1243 779777 Fax: 44-1243 775878 Email: customer@wiley.co.uk John Wiley & Sons Australia, Ltd 33 Park Road P.O Box 1226 Milton, Queensland 4064 AUSTRALIA Phone: 61-7-3859-9755 Fax: 61-7-3859-9715 Email: brisbane@johnwiley.com.au John Wiley & Sons (Asia) Pte Ltd Clementi Loop #02-01 SINGAPORE 129809 Phone: 65-64632400 Fax: 65-64634604/5/6 Customer Service: 65-64604280 Email: enquiry@wiley.com.sg WEBFFIRS 11/26/2016 17:5:34 Page iii GAAP 2017 Interpretation and Application of GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Joanne M Flood WEBFFIRS 11/26/2016 17:5:34 Page iv This edition first published 2017  2017 John Wiley & Sons, Ltd Copyright  by the American Institute of Certified Public Accountants, Inc Several items were quotes or referred to with permission Portions of this book have their origin in copyrighted materials from the Financial Accounting Standards Board These are noted by reference to the specific pronouncement except for the definitions introduced in bold type that appear in a separate section at the beginning of each chapter Complete copies are available directly from the FASB Copyright  by the Financial Accounting Standards Board, 401 Merritt 7, PO Box 5116, Norwalk, Connecticut 06856-5116, USA Registered office John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom For details of our global editorial offices, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at www.wiley.com All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the publisher Wiley publishes in a variety of print and electronic formats and by print-on-demand Some material included with standard print versions of this book may not be included in e-books or in print-on-demand If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com For more information about Wiley products, visit www.wiley.com Designations used by companies to distinguish their products are often claimed as trademarks All brand names and product names used in this book are trade names, service marks, trademarks or registered trademarks of their respective owners The publisher is not associated with any product or vendor mentioned in this book Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with the respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose It is sold on the understanding that the publisher is not engaged in rendering professional services and neither the publisher nor the author shall be liable for damages arising herefrom If professional advice or other expert assistance is required, the services of a competent professional should be sought ISBN 978-1-119-35692-9 (paperback) ISBN 978-1-119-35702-5 (ebk) ISBN 978-1-119-35698-1 (ebk) ISBN 978-1-119-35703-2 (ebk) 10 Set in 10/12pt TimesLTStd by Thomson Digital, Noida, India Printed in the United States of America by Bind Rite WEBFTOC 11/26/2016 16:31:19 Page v CONTENTS Preface ix About the Author xiii Codification Taxonomy xv ASC 105 Generally Accepted Accounting Principles ASC 205 Presentation of Financial Statements 25 ASC 210 Balance Sheet 35 ASC 215 Statement of Shareholder Equity 49 ASC 220 Comprehensive Income 51 ASC 225 Income Statement 59 ASC 230 Statement of Cash Flows 69 ASC 235 Notes to Financial Statements 91 ASC 250 Accounting Changes and Error Corrections 97 10 ASC 255 Changing Prices 125 11 ASC 260 Earnings Per Share 129 12 ASC 270 Interim Reporting 161 13 ASC 272 Limited Liability Entities 173 14 ASC 274 Personal Financial Statements 177 15 ASC 275 Risks and Uncertainties 185 16 ASC 280 Segment Reporting 191 17 ASC 305 Cash and Cash Equivalents 201 18 ASC 310 Receivables 203 19 ASC 320 Investments—Debt and Equity Securities 243 20 ASC 321 Investments—Equity Securities 267 21 ASC 323 Investments—Equity Method and Joint Ventures 273 22 ASC 325 Investments—Other 307 23 ASC 330 Inventory 317 24 ASC 340 Other Assets and Deferred Costs 357 25 ASC 350 Intangibles—Goodwill and Other 373 v WEBFTOC 11/26/2016 16:31:19 Page vi vi Contents 26 ASC 360 Property, Plant, and Equipment 397 27 ASC 405 Liabilities 443 28 ASC 410 Asset Retirement and Environmental Obligations 447 29 ASC 420 Exit or Disposal Cost Obligations 463 30 ASC 430 Deferred Revenue 469 31 ASC 440 Commitments 471 32 ASC 450 Contingencies 475 33 ASC 460 Guarantees 483 34 ASC 470 Debt 495 35 ASC 480 Distinguishing Liabilities From Equity 533 36 ASC 505 Equity 551 37 ASC 605 Revenue Recognition 579 38 ASC 606 Revenue from Contracts with Customers 635 39 ASC 610 Other Income 707 40 ASC 705 Cost of Sales and Services 711 41 ASC 710 Compensation—General 713 42 ASC 712 Compensation—Nonretirement Postemployment Benefits 719 43 ASC 715 Compensation—Retirement Benefits 721 44 ASC 718 Compensation—Stock Compensation 769 45 ASC 720 Other Expenses 807 46 ASC 730 Research and Development 813 47 ASC 740 Income Taxes 819 48 ASC 805 Business Combinations 873 49 ASC 808 Collaborative Arrangements 921 50 ASC 810 Consolidations 931 51 ASC 815 Derivatives and Hedging 975 52 ASC 820 Fair Value Measurements 1031 53 ASC 825 Financial Instruments 1055 54 ASC 830 Foreign Currency Matters 1065 55 ASC 835 Interest 1093 56 ASC 840 Leases 1113 WEBFTOC 11/26/2016 16:31:19 Page vii Contents vii 57 ASC 842 Leases 1179 58 ASC 845 Nonmonetary Transactions 1185 59 ASC 850 Related-Party Disclosures 1199 60 ASC 852 Reorganizations 1201 61 ASC 853 Service Concession Arrangements 1205 62 ASC 855 Subsequent Events 1207 63 ASC 860 Transfers and Servicing 1211 64 ASC 900s Specialized Industry GAAP 1249 Appendix A: Definitions of Terms 1381 Appendix B: Disclosure Checklist for Commercial Businesses 1405 Index 1511 WEBFTOC 11/26/2016 16:31:19 Page viii WEBFPREF 11/26/2016 16:29:14 Page ix PREFACE Wiley GAAP 2017: 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 begins with a list of the Subtopics included within the Topic, major scope and scope exceptions, technical alerts of any 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 Hundreds of meaningful, realistic examples guide users in the application of GAAP to the 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 since Wiley GAAP 2016 and through May 2016 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 • ASU 2015-10, Technical Corrections and Improvements • ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory • ASU 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient (consensuses of the FASB Emerging Issues Task Force) • ASU 2015-13, Derivatives and Hedging (Topic 815): Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contacts within Nodal Energy Markets (a consensus of the FASB Emerging Issues Task Force) • ASU 2015-14, Revenue from Contracts with Customers: (Topic 606): Deferral of the Effective date • ASU 2015-15, Interest—Imputation of Interest (Topic 835): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements— ix WEBFPREF 11/26/2016 x 16:29:14 Page x Preface • • • • • • • • • • • • • Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update)1 ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes 40) ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ASU 2016-02, Leases (Topic 842) ASU 2016-03, Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), Consolidation (Topic 810), Derivatives and Hedging (Topic 815); Effective Date and Transition Guidance (a consensus of the Private Company Council) ASU 2016-04, Liabilities—Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products (a consensus of the Emerging Issues Task Force) ASU 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus of the Emerging Issues Task Force) ASU 2016-06, Derivatives and Hedging (Topics 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force) ASU 2016-07, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting ASU 2016-08, Revenue form Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting 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: • • • • Revenue Recognition—technical improvements and corrections Financial Instruments—Impairment Financial Instruments—Hedging Disclosure Framework 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 FASB began important initiatives The FASB created the Private Company Council to address the Blue Ribbon Panel’s report The FASB issued a framework for the FASB This book does not cover ASU 2015-15 The ASU is an EITF consensus, narrow in scope and only affects two paragraphs in the SEC guidance section of ASC 835, which are not otherwise covered in this book WEBBINDEX 11/26/2016 16:8:43 Page 1548 1548 property, plant and equipment (Continued) postacquisition costs, 404–406 profit-sharing, financing and leasing arrangements, 430–432 real estate sales, other than retail land, 424–441 reinstallations and rearrangements, 405 relocation, 405 repairs and maintenance, 405 rights of use, 1121 unit of accounting, 404 property dividends, 563 property held for sale, exchanged for productive assets, 1195 property sold subject to seller’s preexisting operating lease, 1154 proportional amortization method, 304–305 proportional performance method, service revenues, 605–607 prospective changes to GAAP, disclosures, 110–112 protective rights, definitions, 941–942 proven reserves, definition, 126 provisions asset retirement obligations, 458 changes in leases, 1161–1162 indemnification of leases, 1166 PRP see potentially responsible parties public business entities, public entities accelerated reporting requirements, 171–172 Index changes in accounting principles, 123–124 differentiation from nonpublic entities, 162 employee share awards valuation, 790 fourth quarter adjustments, 171 insurance companies, 1297 interim reporting, 123–124 misstatement corrections, 121–123 quarterly SEC reports, 170–171 purchase call options, 132 purchase commitments, inventory, 356 purchase method, 342 see also acquisition method purchaser’s incremental borrowing rates, definition, 472 purchases derivatives, 977–978 inventory, sales with same counterparty, 1193–1195 loans and groups of loans, receivables, 220 unconditional obligations, 472–473, 986 purchasing power gain or loss, 126 push-down accounting business combinations, 917–919 income taxes, 854 put options, 507, 536–537, 544–549, 688 put warrants, 537, 548–549 PVP see present value of future profits qualification businesses, 878–879 cash flow hedges, 1006–1008 fair value hedges, 996–998 qualified affordable housing projects, 276, 304–305 qualitative assessments, 12 qualitative characteristics of Accounting information (CON 8), 11 quantitative assessments, 12 quantitative impairment tests, 388 quarterly reporting, 170–171 quasi-reorganizations, 1203–1204 Rabbi trusts, 714, 716–717 ratchet design, periodic, 985 rate-regulated entities, asset retirement, 458–460 raw materials, inventory, 324–325 R&D see research and development reacquired rights in business combinations, 899 readily convertible to cash, definition, 985 real estate, 1342–1366 see also leases; real estate other than retail land; retail land abandonment, 1344 changes in use, 1344 exchanges involving monetary consideration, 1193 general, 1342–1346 impairment and recoverability, 1345–1346 income-producing, 126 investments, 440–441, 1346 preacquisition costs, 1343 rental costs, 1345 repossessed, 440 sale-leaseback transactions, 1151–1154 selling costs, 1345 WEBBINDEX 11/26/2016 16:8:43 Page 1549 Index syndications, 441 tax accrual, 811 taxes, ASC 720, 811 time-sharing activities, 1363–1366 real estate and equipment leases, 1147–1148 Real Estate Investment Trusts (REITs), 440, 1346 real estate other than retail land accounting method selection, 432–433 ADC loans, 440 adequacy of investments, 426–429 buy-sell agreements, 432 condominium units, 440 continuing investment not qualifying, 430 cost recovery method, 435–436, 1357–1359 deposit method, 436–438, 1359–1360 foreclosure and subsequent value recovery, 439 full accrual method, 433, 1356 graduated payment mortgages, 430 installment method, 433–435, 1356–1357 other guidance, 439–441 partial sales, 431–432 profit-sharing, financing and leasing arrangements, 430–432 reduced-profit method, 438–439 reduced profit method, 1349, 1360–1361 release provisions, 429 sales, 424–441, 1356–1361 seller’s continuing involvement, 430–432, 1366 seller’s receivable subject to future subordination, 429–430 syndications, 441 realization, definition, 19 realized gains, trading securities, 250–251 realized gross profit, definition, 613 rearrangements, property, plant and equipment, 405 reasonably possible, definition, 477 rebates, uncollectible amounts, 212–213 recalcitrant potential responsible party, definition, 451 receivables ASC 310, 203–236 assets as full vs partial satisfaction of, 236 assignment, 213–214 balance sheets, 39–40 changes in estimates, uncollectible amounts, 211–212 contractually required payments, 206 deferred revenue, ASC 430, 469 definitions, 204–207 direct financing lease transfers, 1239–1240 factoring, 214–216 imputed interest, uncollectible amounts, 212 interest imputation, 1099 interest on installments of sales when collection is uncertain, 617–618 leveraged lease income flow changes relative to income taxes, 1142–1143 1549 loan commitment fees and costs, 219 loan impairments, 216–217, 236 loan origination fees, 218, 1215, 1308 loans and debt securities with deteriorated credit quality, 221–233 nonrefundable fees and other costs, 217–220 overview, 204, 208–217 pledging, 214 presentation of, 209–210 purchases of loans and groups of loans, 220 real estate sales other than retail land, 424–441 refinancing and restructuring fees and costs, 219 sales-type lease transfers, 1239–1240 scope of ASC 310, 204–208 subject to future subordination, real estate sales other than retail land, 429–430 temporary income tax differences on installments, 830 troubled debt restructuring by creditors, 233–240 types, 208–209 uncollectible amounts, valuation allowances, 210–213 variable interest entities, 944–946 voting interest entities, 966 receivables with recourse, transfers, 1224–1227 reclassification adjustments, definition, 52 WEBBINDEX 11/26/2016 16:8:43 Page 1550 1550 reclassifications changes in accounting principle, 112–113 comprehensive income, 54–57 to earnings, cash flow hedges, 1016–1024 long-lived assets held to be disposed of by sale, 421–422 recognition asset retirement obligations, 452–458 assets, 890–908, 1366–1367 available-for-sale securities, 251–256 business enterprises, 17–18 claim costs, insurance companies, 1288–1289 convertible debts without beneficial conversion, 506–507 cost-method investments, 263–264 definition, 19 discontinued operations, 29–31 effective yield method, 305 embedded derivatives, 990–993 equity-based payments to non-employees, 571–574 equity investments, 277–279 expenses, 608–609, 1324–1326 fair value measurements, 1052 gain contingencies, 478 goodwill impairment, 380–381 held-to-maturity securities, 247–249 loss contingencies, 476–478 Index mandatorily redeemable shares, 538–543 noncontrolling interests in acquirees, 908–909 nonmonetary transactions, gains and losses, 1189 other-than-temporary impairment, 260–261, 315–316 principles, profit, 1119, 1361–1365 qualified affordable housing project investments, 304–305 reconciliation method see indirect (reconciliation) method reconciliations, segment reporting, 199–200 recorded investment in the receivable, definition, 207, 500 recorded investments, definition, 207 recourse, 207, 1216 recoverability, 127, 415–416, 1345–1346 recovery of value, foreclosures, 237–238, 439 redeemable instrument reporting, 1107 redemptions equitable rights, 1214 preferred stock, 153–154 redetermination, collaborative arrangements, 922 reduced-profit method, real estate sales other than retail land, 402, 438–439, 1349, 1360–1361 reengineering, business/ technology costs, 812 refinancing fees and costs, 219 refund rights, definition, 625 regular-way security trades, 977, 985 regulated operations, 1366–1369 regulations, plan accounting, 1341 regulatory-assisted combinations, depository or lending institutions, 1281 reimbursable costs, service transactions, 611 reinstallations, property, plant and equipment, 405 reinsurance, 358, 1289–1290 REITs see Real Estate Investment Trusts related parties disclosures, 1199–1200 leases, 952–954, 1166 transactions, plan accounting, 1338 variable interest entities, 948–949, 952–954 relative fair value before construction, 1343 relative sales value methods, inventory, 355 relative selling price method, 625 release provisions, 429, 1349, 1353 relevance, 16 reload features and options, 553, 776, 801–802 reload transactions, timesharing, 1365 relocation, property, plant and equipment, 405 remeasurement events, financial instruments, 985–986 remeasurement method, foreign currency, 1068–1069, 1076–1080 remedial action, definition, 451 WEBBINDEX 11/26/2016 16:8:43 Page 1551 Index remedial investigationfeasibility studies, 452 remediation, environmental, 451, 460–462 removal action, environmental obligations, 452 removal of accounts provision (ROAP), 1286 renegotiation, federal government contracts, 1254 renewals bargain options, 1115 insurance, 1294–1295 leases, 1164–1167 rental costs, real estate, 1345 reorganization items, definition, 1202 reorganization proceedings, definition, 1202 reorganizations, 576, 1201–1204 reorganization value, 1203 repairs, property, plant and equipment, 405 replacement cost, inventory, 347 reportable segments, segment reporting, 194 reporting broadcasters, 1259 cash flows, 14–15 changes in accounting estimates, 113–115 changes in accounting principle, 102–110 effects of accounting changes, income tax, 847–848 effects of tax status changes, 846–847 exit and disposal costs, 467 funding status, defined benefits plans, 746–750 interim periods, 161–172 limited liability entities, 173–174 mortgage banking entities, 1309–1310 objectives, 14–15 redeemable instruments, 1107 segments, 191–201 subsequent events, 1207–1209 title plant sales, 1311 reporting currency, 1067 see also foreign currency reporting entities changes, 99, 115, 170 consolidations, 971 foreign currency matters, 1067 not-for-profit entities, 1320–1321 variable interest entities, 946 reporting units, 376, 379–380, 732 repossessions, 440, 613, 618–619, 1315 repurchase agreements (contracts with customers), 687–688 repurchase agreements as collateralized borrowing, 37, 47–48 financial asset transfers, 1244–1245 mortgage banking entities, 1306–1307 offsetting, 47–48 repurchase financing, 1216, 1308 repurchase-to-maturity transactions, definition, 1216 research and development (R&D), 813–817 arrangements, 816–817, 972–973 assets, 896 1551 milestone method, 634 nonrefundable advance payments, 816–817 software for sale or lease, 1371–1373 sponsors, 814 researching problems, 5–9 resellers, consideration given by service providers, 633–634 residual value business combinations, 896 guarantees, 1144 leased assets, 403, 1160–1161 transfers, leases, 1172 unguaranteed, 1119 restatements, 100, 155, 170 restate-translate, definition, 127 restricted payments, transfers of receivables with recourse, 1224–1225 restructurings, 464 business combinations, 884 loan fees and costs, 219 troubled debts, 499, 527–532 resumption of control, asset transfers, 1238–1239 retailers, inventory capitalization, income tax vs GAAP, 355–356 retail estimation methods, 347–354 average cost, 348 first-in, first-out, 348–350 last-in, first-out, 350–352 retail land, 1347–1363 adequacy of investments, 1350–1353 buy-sell agreements, 1347, 1355 consummation of sales, 1350 WEBBINDEX 11/26/2016 16:8:43 Page 1552 1552 retail land (Continued) continuing investment, 1347, 1353, 1354 continuing involvement of sellers, 1354 cost recovery method, 1347, 1357–1359 deposit method, 1347, 1363 full accrual method, 1347, 1356, 1361–1362 installment method, 1347, 1362–1363 partial sales, 1349, 1354–1355 percentage-of-completion method, 1362 profit recognition, 1361–1363 release provisions, 1349, 1353 retained earnings, equity, 561–562 retained interest, financial asset transfers, 1227–1231 retention of rights, use of property, sale-leaseback transactions, 1149–1151 retirees, definition, 732 retirement benefits see also defined benefit plans; defined contribution plans; postretirement benefits; postretirement benefits other than pensions; retirement obligations ASC 715, 721–766 business combinations, 755–756 curtailments, 726, 731, 756, 758–759 defined benefit plans, 722–760 defined contribution plans, 722, 727, 750, 766 Index disclosures, 751–755 employer’s liabilities and assets, 745–747 funded status, 746–750 measurement dates, 750 multiemployer plans, 722, 766–767 net periodic pension costs, 734–745 non-U.S pension arrangements, 755 other comprehensive income, 743–744, 749–750 other than pensions, 722, 760–766 settlements, 756–757 10% corridor, 740 termination benefits, 759–760 retirement obligations accumulated, 724, 760–766 assets, 447–448, 452–460 expected present values, 455–458 impairment, 418 recognition, 452–458 retirement of redeemable instruments, 538 retrospective application, changes in accounting principle, 100, 102–108 retrospective interest method, definition, 245 return privilege, definition, 621 returns, films, 1267 revenue, 579–634 arm’s-length third parties, 588 barter transactions, 586–587 channel stuffing, 587 commercial businesses disclosures checklist, 1345–1347 concerns, 581 consideration given by vendor to a customer, 630–632 contracts with customers see revenue from contracts with customers customer acceptance of goods or services, 584 customer accounting for consideration given by a vendor, 632–633 deferred, ASC 430, 469 equity instruments received in conjunction with providing goods or services, 629–630 extraordinary transactions, 588 films, 1266 gain vs., 637 general guidelines, 581–586 gross as a principle versus net as an agent, 628–629 interim reporting, 162 loan guarantee fees, 634 long-term construction contracts, 589–604 management fees, 634 mischaracterizations, 588 multiple deliverable arrangements, 625–628 music licensors, 1274–1275 not-for-profit entities, 1323–1324 problems, 586–588 recognition, 579–634 research and development revenues using the milestone method, 634 sales when collection is uncertain, 612–620 sales with guaranteed minimum resale values, 490 WEBBINDEX 11/26/2016 16:8:43 Page 1553 Index sales with right of return, 620–625, 677–678 segment reporting, 194, 199 seller’s remaining obligations, 585–586 service revenues, 604–612 service transactions, upfront fees, 585 service transaction up-front fees, 585 software, 1373–1375 stock compensation, 781 subsequent investments after suspension of equity method loss recognition, 295–299 taxes collected, 586 trading securities, 249–251, 254–256 troubled debt restructurings by debtors, 530–532 uncertainty in income taxes, 840–841 undervalued assets sold to generate reportable gains, 588 unusual transactions, 588 up-front fees, 585 vaccine stockpiles, 634 revenue from contracts with customers, 589, 637–706 additional goods or services, customer options to purchase, 681–682 AICPA industry committees, 693–695 allocation of transaction price, 661–667 alternate recognition model, 645 bill-and-hold arrangements, 689 collaborative arrangements, 647 collectibility threshold, 643–644 combination of contracts required, 646 consideration payable to customer, 660–661 consignment arrangements, 688–689 core principle of revenue recognition model, 641–642 determination of transaction price, 652–661 distinct goods and services, 649–652 enforceability of contracts, 642 escheat laws, 682 existence of contract, 642–643 gains vs revenues, 637 identification of contract, 642–647 identification of customer, 646 identification of performance obligations, 647–652 licenses, 683–687 loyalty programs, 638–639 modifications, contract, 689–693 multiple parties, arrangements with, 647 noncash consideration, 660 onerous contracts, 693 principal vs agent, 680–681 promises, 648–649 reassessment of contracts, 645 recognition of contract, 644 repurchase agreements, 687–688 required disclosures, 693 1553 right of return, 677–678 satisfaction of performance obligation, revenue recognition upon, 667–677 significant financing components, 653–656 Transition Resource Group issues, 695 unclaimed property laws, 682 unexercised rights, customer’s, 682 up-front fees, nonrefundable, 683 variable consideration, existence of, 656–659 warranties, 679–680 reversal years of temporary differences, 833 reverse acquisitions, 877, 914–920 reverse repurchase agreement accounted for as collateralized borrowing, 37, 47–48 reverse spinoffs, 553, 576, 877 reverse treasury stock method, 132 revised estimates, real estate, 1344 revised financial statements, 1207–1209 revolving credit agreements, 503 revolving-period securitizations, 1216, 1243–1244 revolving privileges, definition, 207 rewards of ownership, insubstance common stock, 303 right of return, sales with, 323, 620–625, 677–678 right of setoff, definition, 37 WEBBINDEX 11/26/2016 16:8:43 Page 1554 1554 rights, reacquired, business combinations, 899 rights issues, earnings per share, 132, 155 rights of use, property, plant and equipment, 1121 rights to serviced asset income, 1237–1238 risk assumptions, liability valuations, 1047–1048 risk premiums, definition, 1046 risks, 185–189 collaborative arrangements, 922–923 disclosures, 186–188 fair value, 1034 foreign exchange rates, 982 in-substance common stock ownership, 303 insurance, 359 interest rates, 982 nonpayment, 1225 nonperformance, 985 plan accounting, 1338 timing, 360 transfer, 1159–1160 underwriting, 360 ROAP see removal of accounts provision sabbatical leave, 714, 715 sale-leaseback transactions, 1149–1155 accounting, 1119 assets leased to another party, 1155 continuing involvement by seller-lessees, 1151–1152 involving real estate, 1151–1154 leases, 1182–1183 property sold subject to seller’s preexisting operating lease, 1154 Index retention of rights to use of property, 1149–1151 sales within months of maturity date, 248–249 affiliated entities, 1304, 1308 condominium units, 440 consummation, 425, 1350 costs, 711–712, 966–967 derivatives, 977–978 equipment repurchased subject to operating lease, 1122 franchises, 1313–1314 of future revenue, 1107–1108 guaranteed minimum resale values, 490, 1121–1122 installments, 830 leases, 1169–1170 purchases with same counterparty, 1193–1195 real estate other than retail land, 397, 398, 400–401, 424–441, 1356–1361 retail land, 1347–1363 with right of return, 323, 620–625, 677–678 subject to seller’s preexisting operating lease, 1154 title plant, 1311 unconditional purchase obligations, 472–473, 986 undervalued assets to generate reportable gains, 588 voting interest model consolidations, 966–967 vs licensing of software, 1373 when collection is uncertain, 612–620 sales incentives manufacturers to consumers, 633 time-sharing activities, 1365 vendors to consumers, 711–712 sales-type leases, 1123–1124, 1128–1133, 1163–1164, 1239–1240 sales value computation, retail land, 1349, 1350 SAR see stock appreciation rights saving institutions, 1281–1282 see also finance companies savings accounts, cash, 202 scheduled repayment terms, demand notes, 501 scheduling, reversal years of temporary differences, 833 scrip dividends, 563 seasonality, interim reporting, 169 SEC see Securities and Exchange Commission SEC registrants see public entities secured claim, definition, 1203 securities see also debt securities; equity securities; securitizations acquisition by transfers, 230–233 ASC 320, 243–266 ASC 321, 267–272 available-for-sale, 246, 251–256 beneficial interests, 314–316 changes in fair value after reporting period, 264–266 WEBBINDEX 11/26/2016 16:8:43 Page 1555 Index classifications, 246 cost-method investments, 263–264 distinguishing liabilities from equity, 533–549 held-to-maturity, 246–249 lending transactions, 1245–1246 mortgage-backed, 1306 other-than-temporary impairment, 256–264 presentation, 247–253 scope of ASC 320, 244 scope of ASC 321, 267–268 temporary impairment, 261 trading, 245–246, 249–251, 254–256 transfers between categories, 248, 253–256 Securities and Exchange Commission (SEC) on disclosures, 92 quarterly reporting, 170–171 securities custodians, 37 securitizations, 1216 components of financial asset transfers, 1221–1223 financial asset transfers, 1240–1244 revolving-period-type, 1243–1244 special-purpose entities, 939–940 segmenting contracts, 590, 600–601 segment managers, 193 segment reporting, 191–201 aggregation, 195–196 disclosures, 196–200 entity-wide disclosures, 197–198 interperiod comparability, 194, 197–200 management approaches, 192–193 measurement, 196 operating segments, 193–194 reportable segments, 194 restatement of information previously reported, 197–200 scope of ASC 280, 191–193 segment disclosures, 196–197 tests, 194–195 sellers, 1216 real estate sales other than retail land, 430–432, 1366 remaining obligations, 585–586 selling costs, real estate, 1345 selling price, standalone, 662–664 separate contracts, aggregation, 1121 separate financial statements, income taxes, 854–855 separately accounted for embedded derivatives, 991 separately priced extended warranties, 611 separately reportable investee income items by investors, 299 service, pensions consideration, 1335–1336 service and product transactions, 606 service concession arrangements, 1205–1206 service conditions, share awards, 776 1555 service contracts, federal government contractors, 1253 service cost (component of net periodic pension costs), 732, 736–737 service cost (component of net periodic postretirement benefit cost), 732–733 service inception dates, 776 service transactions, 604–612 costs, 711–712 definition, 615 distinguishing from product transactions, 606 expenses recognition, 608–609 freight services in process, 611 initiation and installation fees, 609–610 losses, 609 reimbursable costs, 611 revenue recognition, 606–608 separately priced extended warranties, 611 up-front fees, 585 servicing mortgage loans, 1307–1308 rights to income, 1237–1238 subcontracted, 1237 transferred financial assets, 1211, 1231–1238, 1285 transfers of rights, 1238 setoff rights, definition, 1216 settlement of an award, definition, 776–777 settlement of pension or postretirement benefit obligation, 733 WEBBINDEX 11/26/2016 16:8:43 Page 1556 1556 settlements debt by exchange of assets, 529–530 pension plans, 26, 756–757 pre-existing arrangements in business combinations, 886–888 severe impact, definitions, 186 share-based payment (or compensation) transactions, 769–805 accounting requirements, 782–793 awards classified as equity, 770, 779–782, 796–798 awards classified as liabilities, 770, 782 binomial/lattice models, 785–789 Black–Scholes–Merton model, 780, 784, 785 business combinations, 900–906 classification, 779 cliff vesting, 791–792 definitions, 554, 777 disclosures, 802–803 to employees, 769–805 ESOPs, 770, 803–805, 848 fair value calculations, 784–793 graded-vesting awards, 780, 793, 905 income taxes, 770, 798–799 lattice models, 775 market conditions, 775, 781, 800 modification, 781–782, 796–798, 800–801 payments in lieu of dividends on options, 802 Index performance conditions, 770–771, 776, 781, 800 performance target achieved after requisite service period, 800 publicly held entity accounts, 790 recognition, 780–781 reload features and options, 776, 801–802 for services, 556 share purchase plans, 770, 805 stock appreciation rights, 793–796 tandem plans, 777, 793–796, 801 temporary income tax differences, 828 valuation models, 779–780 shared power, variable interest entities, 947 shareholder equity, statement of, 49 shares, 534 see also earnings per share; share-based payment (or compensation) transactions cash flow per, 79 cliff-vesting awards, 791–792 committed-to-be-released, 773 contingent issuance, 131 dividends, 42, 132–137, 311, 562–565, 854 employee share purchase plans, 770, 805 in exchange for property or services, 556 fixed number put options, 548 graded-vesting awards, 780, 793, 905 issuance, 131, 555–557 lump-sum sales, 556–557 mandatorily redeemable, 43, 538–543, 547, 985 nonvested, 775 obligations to issue, 543 obligations to repurchase, 544–549 options, 773, 777, 790 payments to nonemployees, 570–575 potential common stock, 132 preferred, 132, 547, 553, 555, 574–575 splits, 554 subscriptions, 557–558 treasury stock, 565–570 volatility, 778 share units, definition, 777 shipping and handling services (contracts with customers), 649 short-term inducement, definition, 777 short-term investments, balance sheets, 39 short-term obligations, definition, 37 short-term obligations expected to be refinanced, 503–506 sick pay, 714–715 significant decreases in market activity, 1043–1046 significant estimates impairment, 418 risks and uncertainties, 187–188 significant influence absence of ownership of voting common stock, 302–304 equity method investments, 277, 299, 302–304 significant risk and rewards, collaborative arrangements, 922–923 WEBBINDEX 11/26/2016 16:8:43 Page 1557 Index silos, variable interest entities, 949 simple capital structure earnings per share, 132–137 numerators and denominators, 133 treasury stock, 133 single-employer plans, retirement benefits, 733 single exchanges, inventory, 1193–1194 site restoration costs, impairment, 418 size of initial investment, real estate other than retail land, 426–429 slot machines, 1263 software, 1370–1379 costs for development internally for sale or lease, 1371–1373 delivery, 1373 developed for internal use, 388–395 element-by-element basis, 1373–1374 exclusions, 1374–1375 fair values, 1374 indemnification clauses, 491 operational rules, 1375–1377 other guidance, 1377–1379 revenue recognition, 1373–1375 solvency, 15 SPE see special-purpose entities special arrangements, loans, 220 special funds, investments held in, 41 special-purpose entities (SPE), 939–940, 1364, 1366 see also variable interest entities special termination benefits, 719–720 specific performance method, service revenues, 605, 606 spending rate, definition, 1319–1320 spinoffs, 554, 575–576 split-interest agreements, notfor-profit entities, 1330–1331 sponsors, 942 research and development, 814, 972–973 retirement benefits, 733, 1336 spot rate, definition, 986 springing lock-box arrangements, 500, 503 standalone selling price, 662–664 stand-alone valuation premise, 1047 stand-alone value, definition, 625 standard costs methods, inventory, 352–354 standard representations and warranties, 1216 standby letter of credit, 207 standstill agreements, 276 start-up costs, 807–808, 810 statement of cash flows, 69–89 cash flow per share, 79 cash focus, 71 classifications, 71–74 consolidated entities, 88–89 direct method, 70, 75–76 disclosures, 89 discontinued operations, 79 fair value option display, 1062 financial institutions, 79 financing activities, 70 1557 foreign currency, 79–80 gross vs net basis, 78 hedging transactions, 79 indirect method, 70, 76–78 investing activities, 71 investment company exemptions, 1300 operating activities, 71, 75–78 preparation, 79–88 statement of changes in net assets available for benefits, 1337 statement of changes in net worth, personal finances, 178, 182–183 statement of financial position see also balance sheets fair value options, 1060–1061 form, 37–38 goodwill presentation, 382 insurance investments, 311–312 lease classification, 1176 mixed attribute model, 1046–1050 personal finances, 178, 182 presentation, 44–47 retirement benefits, 746 statement of income, 59–67 see also income statements format, 52–58 limitations, 52 statement of net assets available for benefits, 1337 statement of net assets in liquidation, 26 statement of shareholder equity, 49 statements of changes of net assets in liquidation, 26 WEBBINDEX 11/26/2016 16:8:43 Page 1558 1558 Statements of Financial Accounting Concepts (CON) CON 5, 17–18 CON 6, 18–19 CON 7, 20–24 CON 8, 13, 14–17 conceptual framework, 13–14 statements of income and comprehensive income, 52–58, 61–63 step acquisitions, business combinations, 911–912 stock appreciation rights (SAR), 794–796 stockholder’s equity, definition, 552 stock options, convertible bonds, 508 stocks see equity; sharebased payment (or compensation) transactions; shares stock splits, simple capital structure, 133–136 straight-line depreciation, 407 stranded costs, regulated operations, 1368–1379 strategic buyers, 1046 strategic shift, 28 strict liability, 452 stripping costs, mining, 356 structured notes, 245, 265–266, 1030 structuring, business combinations, 879, 914–915 subcontracted servicing, 1237 subcontractors, 590, 593, 1253 subjective acceleration clauses, 500, 502 subleases, 1155–1156 subordination in-substance common stock, 303 Index retail land sales, 1349, 1353–1354 variable interest entities, 941 subscriber-related costs, cable television, 1260–1262 subscriptions, stock, 557–558 subsequent events, 1207–1209, 1273 subsequent investments after suspension of equity method loss recognition, 295–299 subsequent measurement effective yield method, 305 employee termination benefits, 466 equity investments, 279–280 guarantees, 489 retirement obligations, 455–458 uncertainty in income taxes, 843–844 subsequent reassessment, leases, 1121 subsequent recognition, uncertainty in income taxes, 843–844 subsidiaries changes in parent’s ownership interest, 912–913 freestanding derivatives indexed to, and potentially settled in stock of, 1029–1030 separate financial statements, 854–855 spinoffs and reverse spinoffs, 575–576 substantial completion, 590 substantial doubt, about an entity’s ability to continue as going concern, 26, 32–33 substantive conversion features, 500 substantive plans, retirement benefits, 732 substituted debtors, troubled debt restructurings, 235 subtopics, 5–6 sufficiency of equity, variable interest entities, 951 sum-of-the-years’ digits (SYD) depreciation, 407 supervisory goodwill, 1278–1279, 1282 supply contracts, federal government contractors, 1253 surplus notes, insurance companies, 1290 surrender charges, definition, 310 surrender of control, financial assets, 1217–1219 suspense shares, definition, 777 suspension, retirement benefits plans, 732 suspension of equity method loss recognition, subsequent investments, 295–299 swap rate, Fed Funds effective, 982 SYD see sum-of-the-years’ digits syndications loans, 1215 real estate sales, 441 systematic risk, 1046 take-or-pay contracts, 472–473, 986 takeover defense, treasury stock costs, 568–569 tandem awards/plans, employee stock options, 777, 794–796, 801 tangible assets, 397–441 WEBBINDEX 11/26/2016 16:8:43 Page 1559 Index acquired in a group, 403–404 acquisition of groups, 403–404 balance sheets, 41 business combinations, 890 buy-sell agreements, 432 construction for internal use, 403 depletion, 409–410 depreciation, 406–410 disposals, 420–423 income tax deferral, 419 initial acquisition, 402–404 long-lived assets, 411–412, 420–423 partial sales, 431–432 postacquisition costs, 404–406 real estate sales other than retail land, 424–441 unit of accounting, 404 taxable income, definition, 824 taxable temporary differences, definition, 824 taxation see also income taxes collected, reporting as revenue, 586 investment companies, 1300 offsetting, 47 personal, 811 planning strategies, 824, 839–840 real estate, 811, 1343 tax consequences, 823 unallocated ESOP dividends, 154 tax credits, dividend payments, 854 tax-exempt borrowings, interest capitalization, 1099 tax-exempt debt refunds, lease changes, 1169 tax position (and changes to), 823–824, 846–847 TDR see troubled debt restructuring techniques, disclosures, 96 technological feasibility, 1372 technology-based intangible assets, business combinations, 895 technology reengineering costs, 812 temporary differences in income taxes, 824, 827–830 temporary idling of longlived assets, 423 temporary impairment, investment securities, 261 temporary increases in interest rates, troubled debt restructurings, 235 tenancy-for-years, timesharing arrangements, 1364 tentative minimum tax, 824 terminal value, definition, 1203 terminated defense contracts, 1254 termination early, leases, 1162–1164 plan accounting, 1341–1342 retirement benefits plans, 732 termination benefits, 719, 732 non-retirement, 719–720 retirement benefit plans, 759–760 termination indemnities, 732 terminology, codification, 1559 term of lease, definition, 1117–1118 terms CON 6, 18, 19 definitions, 3, 1381–1404 terms of a share-based payment award, 554, 777–778 testing, software, 1371 third parties collaborative arrangements, 923–924 equity-based payments, 570–575 sales or assignments of leases, 1169–1170 throughput contracts, 472–473 time and materials contracts, 593–595 timeliness, 17 time off, paid, 714–715 time of issuance, debts, 500 time periods, interest capitalization, 1099 time-sharing activities real estate, 1363–1366 reload transactions, 1365 time values, share awards, 778 timing adoption decision disclosures, 95–96 employee termination benefits, 465–466 initial and subsequent assessments of leases, 1121 timing risk definition, 360 transfer of, 363 title plant, financial services, 1310–1311 trade notes payable, balance sheets, 42 trade-offs, 17 trading, definition, 986 WEBBINDEX 11/26/2016 16:8:43 Page 1560 1560 trading purposes, definition, 986 trading securities, 246, 249–251, 254–256 transaction mischaracterizations, 588 transaction price (contracts with customers) allocation of, 661–667 changes in, 666–667 determination of, 652–661 transactions see also exchange transactions; nonmonetary transactions business combinations, 873–920 commercial businesses disclosures checklist, 1364–1401 costs, 1046, 1052 definition, 19 dropdown, 137–138 extraordinary, 588 foreign currency, 1066 orderly, 26, 1045 product-type, 605, 606 related parties, plan accounting, 1338 securities lending, 1245–1246 service-type, 605, 606 single exchanges, 1193–1194 unusual, 588 transferees, definition, 1216–1217 transferors, definition, 1217 transfer pricing, segment reporting, 196 transferred financial assets, definition, 1217 transfers between categories of securities with readily Index determinable fair values, 248, 253–256 completion, definition, 205 components of financial assets, 1221–1223 debt securities acquired, 230–233 definition, 534, 1217 financial assets, 1211–1248 nonreciprocal, 1187, 1189–1191 participating interest, 1215–1216 pools of loans acquired, 228–230 receivables with recourse, 1224–1227 received through agents, trustees and intermediaries, 1326–1327 of residual value, leases, 1172 risk, lessee construction, 1159–1160 servicing rights, 1238 transiting goods, 320–321 transition assets, retirement benefits, 732 transition obligations, retirement benefits, 732 Transition Resource Group (TRG), 639, 695 translate-restate, definition, 127 translation, foreign currency, 1067, 1081–1083 translation adjustments, foreign currency, 127, 1067 transportation costs, 1046, 1052 treasury stock, 133, 565–570 treasury stock method, 132, 140–143 troubled debt restructurings (TDR), 233–240, 499, 527–532 trustees, 1203, 1320, 1326–1327 turnover, definition, 732 two-class common stocks, 138–139 two-class method, earnings per share, 146–149 two-step initial recognition and measurement, 842 ultimate participation costs, films, 1271 ultimate revenue, films, 1270–1271 UMIFA see Uniform Management of Institutional Funds Act unallocated contracts, definition, 732 unallocated ESOP share dividends, 154 unamortized film costs, 1272–1273 unasserted claims or assessment contingencies, 477–478 uncertain cash flows, 891 uncertain collection of goods or services, 612–620 uncertainties, 185–189, 840–845, 1338 unclaimed property laws, 682 uncollectible amounts, 210–213, 1365 unconditional purchase obligations, 472–473, 546–547, 986 uncorrected misstatement evaluation, 120–123 underfunding, defined benefit plans, 747 undersecured claims, 1203 understandability, 17 WEBBINDEX 11/26/2016 16:8:43 Page 1561 Index undervalued assets sold to generate reportable gains, 588 underwriting risk definition, 360 transfer of, 363 undistributed earnings of an investee, 851–854 undistributed earnings of a subsidiary, 850–851 unestimable future product returns, 624–625 unfunded accumulated postretirement benefit obligations, 732–733 unfunded projected benefit obligations, 732 unguaranteed residual value, definition, 1119 UNICAP see uniform cost capitalization unidentifiable intangible assets, 1281 uniform capitalization rules, income tax vs GAAP, 355–356 uniform cost capitalization (UNICAP), 830 Uniform Management of Institutional Funds Act (UMIFA), 1328 Uniform Prudent Management of Institutional Funds Act (UPMIFA), 1329 unilateral ability, definition, 1217 unilateral administrative orders, 452 union employees, minimum retention periods, 465 unit last-in, first-out approach, 330–334, 340–341 unit price contracts, 593 units of accounting fair value, 1042 indefinitely-lived intangible assets, 387 multiple deliverable arrangements, 627–628 other-than-temporary impairment, 257–260 tangible assets, 404 units of production, depreciation, 407 units-of-revenue method, debts, 500 unobservable inputs, fair value, 1046, 1049–1050 unproven potential responsible parties, 452 unrealizable deferred income tax asset valuation allowances, 835–840 unrecognized firm commitments, foreign currency hedges, 1025 unrecognized prior service costs amortization, 741–742 unrecognized tax benefits, 824 unrecognized transition obligations (UTO), 762–763 unrelated business income, 824 unrelated parties, definition, 1119 unrelated third parties collaborative arrangements, 923–924 long-term construction contracts, 601–602 unsecured claims, definition, 1203 unsystematic risk, definition, 1046 unusual items, 66, 167–169, 866–868 unusual nature, 61, 66 unusual transaction mischaracterizations, 588 1561 up-front fees nonrefundable, 683 service transactions, 585 UPMIFA see Uniform Prudent Management of Institutional Funds Act U.S government contract investments, mutual funds, 265 useful life, 384–385, 895–896 usefulness for decision, 15 useful qualitative characteristics of financial information, 15–17 UTO see unrecognized transition obligations vaccine stockpiles, revenue recognition, 634 valuation allowances, 825 business combinations, 906–907 deferred income tax assets expected to be unrealizable, 835–840 effects of changes in tax law, 846 establishment, 835–840 notes to financial statements, 96 uncollectible amounts, 210–213 valuation assets, premises, 1046–1047 binomial/lattice models, 785–789 Black–Scholes–Merton model, 780, 785 cliff-vesting awards, 791–792 fair value techniques, 1051–1052 first-in, first-out, 329–330 graded-vesting awards, 780, 793, 905 WEBBINDEX 11/26/2016 16:8:43 Page 1562 1562 valuation assets, premises (Continued) inventory, 328–346 last-in, first-out, 330–344 liabilities, risk assumptions, 1047–1048 multiperiod options, 786–789 share-based payment awards to employees, 779–780, 784–793 unamortized film costs, 1272–1273 valuation models, sharebased awards to employees, 779–780 value, terminal, 1203 valued at selling price, inventory, 356 value in use, definition, 127 ’vanilla’ interest rate swaps, 1016–1020 variable consideration, 665–666 variable interest entities (VIE) consolidations, 931–937, 939, 942–965, 968 above-/below-market rentals, 954 design analysis, 944–945 expected future cash flow estimation, 945–946 expected losses, 940 expected residual returns, 941 expected variability, 942, 944 fees paid to decision makers, 947 guarantees, 953–954 implicit interests, 951–954, 958–959 implicit variable interests, 951–954, 958–959 initial determination of status, 946 Index interest holder as primary beneficiary, 947–948 leases, 952–954 limited partnerships, 968 measurement, 950–951 noncontrolling interests, 951 primary beneficiaries, 941, 946–950 reconsideration of status, 965 related parties, 948–949, 952–954 reporting consolidations, 955–965 reporting entities, 946, 955–965 shared power, 947 special-purpose entity securitization, 939–940 subordinated financial support, 942 sufficiency of equity, 951 variable interests, 942 implicit, 951 leases, 1115, 1119–1120 silos, 949 time-sharing activities, 1366 variable overheads, 326–327 variable-rate forward contracts, 534 variable settlement dates, forward contracts, 549 variable stock plans, employees, 794–796 variable terms, intrinsic value, 516–534 vendor-specific objective evidence (VSOE), 626, 1374 verifiability, 17 vesting, 778 cliff-type, 791–792 compensated absences, 714 employee stock compensation, 780–781, 791–793, 905 graded, 780, 793, 905 retirement benefits, 734, 736–737 VIE see variable interest entities violation of a provision, 500 volatility, definition, 778 voluntary benefits, employee termination, 466 voluntary health and welfare organizations, 1320 voting interest model consolidations, 966–967 VSOE see vendor-specific objective evidence vulnerability due to concentrations, 188 warranties, 485, 487, 490–491, 611, 679–680 warrants, 138, 148–149, 537 weather derivatives, 1030 website development costs, 373, 395 weighted-average methods, inventory, 344–345 weighted-average number of common shares outstanding, 132 WIP see work-in-progress withholdings, balance sheets, 42 working models, software, 1371 work-in-progress (WIP), 590 full absorption costing, 325–328, 352–353 inventory, 319, 325–328 wrap-lease transactions, 1171–1172 year-end differences, consolidations, 967 year-to-date diluted earnings per share, 155–156 zero-coupon method, derivatives, 986 ... Checklist Wiley GAAP 2017: Interpretation and Application of Generally Accepted Accounting Principles Wiley Practitioner’s Guide to GAAS 2017: Covering all SASs, SSAEs, SSARSs, and Interpretations Wiley. .. 11/26/2016 11:12:39 Page Wiley GAAP 2017: Interpretation and Application of Generally Accepted Accounting Principles, First Edition Joanne M Flood  2017 by the American Institute of Certified Public... PREFACE Wiley GAAP 2017: Interpretation and Application provides analytical explanations, copious illustrations, and nearly 300 examples of all current generally accepted accounting principles