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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 978-1-118-94519-3 (paperback) ISBN 978-1-118-84506-3 (ebk) ISBN 978-1-118-94515-5 (ebk) ISBN 978-1-118-94505-6 (obk) Set in 10/12pt Times LT Std by Laserwords Private Limited, Chennai, India Printed in the United States of America by Bind Rite CONTENTS Preface vii About the Author xi xiii Codification Taxonomy ASC 105 Generally Accepted Accounting Principles ASC 205 Presentation of Financial Statements 29 ASC 210 Balance Sheet 45 ASC 215 Statement of Shareholder Equity 61 ASC 220 Comprehensive Income 63 ASC 225 Income Statement 71 ASC 230 Statement of Cash Flows 83 ASC 235 Notes to Financial Statements 103 ASC 250 Accounting Changes and Error Corrections 109 10 ASC 255 Changing Prices 137 11 ASC 260 Earnings Per Share 141 12 ASC 270 Interim Reporting 171 13 ASC 272 Limited Liability Entities 187 14 ASC 274 Personal Financial Statements 191 15 ASC 275 Risks and Uncertainties 199 16 ASC 280 Segment Reporting 205 17 ASC 305 Cash and Cash Equivalents 217 18 ASC 310 Receivables 221 19 ASC 320 Investments—Debt and Equity Securities 257 20 ASC 323 Investments—Equity Method and Joint Ventures 283 21 ASC 325 Investments—Other 317 22 ASC 330 Inventory 329 23 ASC 340 Other Assets and Deferred Costs 367 24 ASC 350 Intangibles—Goodwill and Other 375 25 ASC 360 Property, Plant, and Equipment 399 26 ASC 405 Liabilities 445 27 ASC 410 Asset Retirement and Environmental Obligations 449 28 ASC 420 Exit or Disposal Cost Obligations 465 v Contents vi 29 ASC 430 Deferred Revenue 471 30 ASC 440 Commitments 473 31 ASC 450 Contingencies 477 32 ASC 460 Guarantees 485 33 ASC 470 Debt 499 34 ASC 480 Distinguishing Liabilities From Equity 539 35 ASC 505 Equity 555 36 ASC 605 Revenue Recognition 587 37 ASC 705 Cost of Sales and Services 645 38 ASC 710 Compensation—General 647 39 ASC 712 Compensation—Nonretirement Postemployment Benefits 653 40 ASC 715 Compensation—Retirement Benefits 655 41 ASC 718 Compensation—Stock Compensation 707 42 ASC 720 Other Expenses 745 43 ASC 730 Research and Development 751 44 ASC 740 Income Taxes 757 45 ASC 805 Business Combinations 811 46 ASC 808 Collaborative Arrangements 859 47 ASC 810 Consolidations 869 48 ASC 815 Derivatives and Hedging 901 49 ASC 820 Fair Value Measurements 961 50 ASC 825 Financial Instruments 985 51 ASC 830 Foreign Currency Matters 995 52 ASC 835 Interest 1023 53 ASC 840 Leases 1041 54 ASC 845 Nonmonetary Transactions 1115 55 ASC 850 Related-Party Disclosures 1127 56 ASC 852 Reorganizations 1129 57 ASC 853 Service Concession Arrangements 1135 58 ASC 855 Subsequent Events 1139 59 ASC 860 Transfers and Servicing 1143 60 ASC 900s Specialized Industry GAAP 1181 Appendix Disclosure Checklist for Commercial Businesses 1317 Index 1419 PREFACE Sign Up for Free Monthly GAAP Newsletter 2014 brought one of the most significant Accounting Standards Updates in years— Revenue Recognition The leases project continues to move forward, and FASB continues to make progress on its private company reporting initiative Wiley's new free monthly newsletter will help you stay ahead in the face of growing challenges Cutting through the complexity, the newsletter will give you, clearly and concisely, the latest information on critical technical developments and practical insights on the most recent standards setting activities of the FASB, AICPA, and others Register today at www.wiley.com/go /GAAP2014, using password floodgaap2014 Wiley GAAP 2015: 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 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 the Wiley GAAP 2013 Their requirements are incorporated in this edition of Wiley GAAP, as and where appropriate Information on ASU 2014-09 is included in the chapter on ASC 605 vii Preface viii Number Title Issue Date ASU 2014-09 Revenue from Contracts with Customers (Topic 606) 5/28/2014 ASU 2014-08 Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity 4/11/2014 ASU 2014-07 Consolidation (Topic 810): Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements (a consensus of the Private Company Council) 3/20/2014 ASU 2014-06 Technical Corrections and Improvements Related to Glossary Terms 3/14/14 ASU 2014-05 Service Concession Arrangements (Topic 853) (a consensus of the FASB Emerging Issues Task Force) 01/23/14 ASU 2014-04 Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force) 01/17/14 ASU 2014-03 Derivatives and Hedging (Topic 815): Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps—Simplified Hedge Accounting Approach (a consensus of the Private Company Council) 01/16/14 ASU 2014-02 Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill (a consensus of the Private Company Council) 01/16/14 ASU 2014-01 Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects (a consensus of the FASB Emerging Issues Task Force) 01/15/14 ASU 2013-12 Definition of a Public Business Entity—An Addition to the Master Glossary 12/23/13 ASU 2013-11 Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force) 07/18/13 Index asset retirement obligations 454–460 assets 454–460, 1303, 1306 business combinations 820–843 CON 21 consolidations 886–888 debt 511–512, 534–536 definitions 22 equity 575–579 equity method 289–291, 316 exit/disposal cost obligations 467–468 fair value 982 GAAP definition, ASC 105 guarantees 485, 492–494, 643 income statements 72–75 income taxes 766, 778–783, 801–804 intangible assets 387, 392, 402 non-employee payments 575–579 nonmonetary transactions 1118 profit 1298–1299 service revenues 588, 589–594, 614–621, 638–642 stock compensation 720–721, 736–737 timing of 454, 467–468 transfers and servicing 1145, 1150, 1156–1157 troubled debt restructuring 534–536 uncertainty in income taxes 778–783 VIE 886–888 reconciliations segment reporting 212, 214–215 statement of cash flow 85, 88–100 recorded investments 229, 239, 505 recording/record masters 1206, 1207 recourse ASC 460 1148, 1149, 1157–1160, 1173 ASC 815 1158 receivables 229–230, 237–238 transfers 1148, 1149, 1157–1160, 1173 recoverability price changes 139 real estate 1282–1283 redeemable instruments 1037 see also mandatorily redeemable reduced profit method 405, 440–441, 1284, 1292, 1297–1298 reengineering costs 745, 749 refinancing 508–511, 1218–1219 refund periods 1298 refund rights 634, 641 registration payment arrangements 985 regular-way security trades 903, 913 regulated operations abandonment 1303–1304 accounting for 1302–1306 ASC 980 1302–1306 assets 1303, 1304, 1306 concepts/rules/examples 1302–1306 costs 1304–1305 liabilities 1303, 1304 perspectives/issues 1302 pricing 1305–1306 regulatory-assisted combination acquisitions 1214 reimbursable costs 620, 641 reimbursement rates 670 reinstallations 409, 603 reinsurance 445, 1227 REIT see Real Estate Investment Trusts related parties consolidations 877, 883–888 definitions 658–659, 1127–1128 disclosures 1127–1128, 1411 fair value 967 guarantees 491 investment companies 1235 leases 1047, 1051–1060, 1092, 1105 plan accounting 1274 R&D 752 1465 receivables 230, 231, 234 retirement benefits 658–659 stock compensation 715 variable interest entities, consolidations 883–888 relative fair value 1280 relative sales value 364 relative selling price method 634, 635 release provisions 452, 1284, 1290 reload feature/options 558, 715, 7396 reload transactions 1301 relocation costs 409 remeasurement method derivatives and hedging 913 foreign currency 998–999, 1006–1010, 1022 remediation obligations 449–453, 461–463 remote chance 479, 480, 1148 remote entities 1145, 1151 renegotiations 1097, 1179, 1186 renewals insurance 1232 leases 1102–1104 rentals leases 1044, 1054, 1055–1060, 1062–1082, 1094–1096 (real estate) costs 1279, 1282 reorganizations ASC 852 1129–1133 balance sheets 59 bankruptcy 1129, 1130, 1132–1133 concepts/rules/examples 1132–1133 corporate bankruptcy 1132–1133 definitions 1130–1132 disclosures 1131, 1133, 1412 financial reporting 1412 perspectives/issues 1129–1130 quasi-reorganizations 1129, 1133, 1412 value 1132 repair and maintenance 409 see also maintenance repayment terms 506 1466 repetition, notes to financial statements 104 replacement awards 715, 836–841 reportable segments 208–210, 213–214 reported funded status 686–690 reporting see also interim reporting; segment reporting broadcasters 1192 comprehensive income 63, 69–70 discontinued operations 38–42, 1321, 1322 exit/disposal cost obligations 470 fair value hedges 924–928 funded status 665, 684–690 limited liability entities 188–189 mortgage banking 1246–1247 revenue recognition 594, 637–643 statement of cash flow 83–101 taxes 594 title plant 1249 reporting currency, definition 997 reporting entities see change in reporting entities reporting units debt/equity securities 261 definitions 32, 558 equity 558, 578 fair value 377, 380–386 goodwill 380–386 property, plant and equipment 405 repossessions franchisors 1253 real estate sales 442 sales when collection uncertain 622, 627–628 representations financial information 19–21 transfers and servicing 1149 repurchase agreements balance sheets 47–48, 58–59 liability/equity characteristics 543, 549–553 Index mortgage banking 1242, 1244, 1245 shares 543, 549–553, 573–574 transfers and servicing 1145–1146, 1148, 1153–1154, 1176–1177 repurchase financing 1149, 1153–1154, 1242, 1244, 1245 required service period 838–839 requisite service period 715, 718, 722, 838–841 resale values 494, 627, 1061 research and development (R&D) ASC 730 751–755 assets 780–781 business combinations 831–832 concepts/rules/examples 753–755 consolidations 899 contractual arrangements 753, 754–755 costs 753–755, 1377 definitions 752 disclosures 1377 expenses 753–755, 1377 milestone method 643 nonrefundable advance payments 755 perspectives/issues 751–752 reporting entities 753, 754 revenue recognition 643 scope of ASC 730 751 software 1308–1309 sponsors 877, 899 research problems/procedures see also research and development authoritative/nonauthoritative literature searches 12–15 GAAP concepts/rules 7–15 Internet sources 14–15 nonpromulgated GAAP 13–14 procedural steps 11–15 use of this publication 13 reserves depository/lending services 1212, 1215–1217 insurance 1227, 1234 price changes 138 residual profits 222, 228 residual returns 873, 882, 1055–1060 residual values intangible assets 380, 388–389, 402, 831 leases 407, 1047, 1066, 1073–1075, 1083, 1097–1099, 1109–1110 resolution considerations, discontinued operations 37–38 restatements accounting changes 112, 113, 136 earnings per share 166 interim reporting 183 per-share terms 136 segment reporting 213–215 restate-translate, definition 139 restoration costs 422 restricted payments 1158 restricted shares 715 restrictions, stock compensation 715 restructuring see also troubled debt restructuring business combinations 820–821 costs/fees 467, 1218–1219 retail estimation method 358–362 retail land concepts/rules/examples 1285–1299 definitions 1279–1280, 1284–1285 full accrual method 1298 instalment method 1284, 1299 investments 1284–1299 percentage-of-completion method 1299 perspectives/issues 1283–1284 profit recognition 1298–1299 real estate (ASC 976) 1283–1299 sales 1298–1299 retained earnings 57, 566–567, 583 capital 556, 560, 564–567 statement of income accounting changes 114–121, 124 Index balance sheets 46, 54–55, 57 cash flow statements 93–97, 100 error corrections 128–131 foreign currency 999–1003, 1006–1007, 1017–1018 retained interests 1160–1163 retention rights 1087–1089 retirees, definitions 671 retirement assets: ASC 410 449–463 retirement benefits see also pension ; plan accounting; postretirement benefits accumulated benefit obligations 659, 666, 671, 673, 675–676, 683–685, 699–705 actual return on plan assets 659, 667, 673, 676–677, 681 actuarial present value 659, 686, 700 amortization 657–659, 663–664, 669–673, 677–704 annuity contracts 659, 664, 694 ASC 715 655–705 assumptions 660, 662, 663, 682–683, 690, 701–702 business combinations 835–836 cash balance plans 660, 686 compensation 655–705, 1362 comprehensive income 688–689 concepts/rules/examples 672–705 contributory plans 656, 661–662, 694, 1270–1279 credited service period 668, 686–690 curtailment 668, 695–698 deferred compensation 699–705 defined benefit plans 661–662, 672, 677, 683–703 definitions 32, 657–672 disclosures 690–694, 1362–1373 employer assets/liabilities 683–686 expected return on plan assets 662, 669, 682 expenses 1362–1373 financial statements 689–690, 693 funded status 686–694 gains 662–663, 669, 673, 677–679, 681–683, 698 insurance contracts 667, 668, 670, 686, 694 interest costs 663, 670, 676, 682 interim financial statements 690, 693 life insurance plans 667, 668, 686 loans 689 losses 662–663, 669, 673, 677–679, 681–683, 698 Medicare reimbursement rates 670, 703–704 multiemployer plans 656, 663, 671–672, 687–689, 694–695 net periodic pension costs 657–659, 663–665, 672–683 non-for-profit entities 693–694 nonpublic entities 658, 664, 690–694 non-US pension arrangements 695 other than pensions 699–705 perspectives/issues 655–657 plan assets 659, 662–665, 667, 669, 673, 676–679, 681–686 prescription drug benefits 703–704 prior service costs 665, 673, 679–681, 686–690 regulated operations 1304 reported funded status 686–690 scope of ASC 715 656 service costs 665, 671, 673–676, 679–683, 686–690 settlement 32, 659, 665, 695–696 termination benefits 666, 698 vested benefits 666, 686 1467 weight-average assumptions 682–683, 690 year-end financial statements 689–690 retrospective application 109, 112, 114–122, 261, 597–598 return privileges 629 return rights definitions 629 films 1199–1200 goods 334 inventory 334 perspectives/issues 629 requirements met/not met 631–632 revenue recognition 629–633 returns actual returns on plan assets 657, 658–663, 667–678, 681–683, 685 expected residual 873, 882, 1055–1060 expected return on plan assets 662, 669, 682 revenue advertising barter transactions 1359 barter transactions 1359 cable television 1194 codification topics contracts 589, 596, 598–613, 1360–1361 customer payments 1361 deferred revenue 471 development 643 disclosures 1359–1361 gross 594–596, 620, 1329 incentive programs 1361 income statements 72–73, 76–79 interim reporting 174 milestone method 1360 music industry 1206–1208 principal agent considerations 1361 real estate 1279 segment reporting 208, 213–214 services 1359 transactions 589–598, 1359 ultimate revenue 1196, 1201–1205 revenue recognition agents 611–612, 637–638 1468 ASC 605 588–643 construction contracts 589, 596, 598–613 customer considerations 589, 592–593, 597–598, 639–642 delivery considerations 589–594, 605, 634–637, 640 disclosures 598, 636–637 fees 614, 619–620, 642–643 films 1197, 1198–1201 franchise sales 1250–1252 general principles 588–598 leases 1060–1062 long-term construction contracts 596, 598–613 losses 589, 608–609, 619 multiple deliverable arrangements 589, 634–637 not-for-profit entities 1260–1261 problems in 594–596 R&D 643 reporting issues 594, 637–643 return rights 629–633 sales incentives manufacturers to consumers 641–642 sales when collection is uncertain 621–629 service revenues 588, 589–594, 614–621, 638–642 software 1309–1315 special issues 637–643 taxes 594 technical alerts 597–598 transaction principles 589–598 TRG 598 vaccine stockpiles 642 vendor considerations 634, 635, 639–642 reversal years scheduling 771 reversal years of temporary differences 771–773 reverse acquisitions 812, 815, 854–857 reverse spin-offs 558, 815, 857–858 reverse treasury stock method 144, 164 Index reversed repurchase agreements 47–48, 58 revised financial statements 1140 revolving credit agreements 500, 508 revolving period securitizations 1149, 1173, 1175–1176 revolving privileges 223, 230 rewards, risks and 433–434, 861 right of return see return rights rights see also return rights appreciation rights 732–734, 735–736, 738 business combinations 834–835 consolidations 874, 876, 895, 896, 897 earnings per share 166 EPS 166 equitable right of redemption 1146 exchange rights 1151, 1152, 1156 future income rights 1169–1170 income 1169–1170 interest imputation 1030, 1031–1032, 1035–1036 kick-out rights 874, 896 leases 1087–1089 notes issuance 1030, 1031, 1035–1036 participating rights 558, 664, 670, 876, 895, 897 pledge rights 1151, 1152, 1156 property retention 1087–1089 protective rights 876, 897 reacquired rights 832, 834–835 refund rights 634, 641 retention rights 1087–1089 set-off rights 48, 1149, 1152 stock appreciation rights 732–734, 735–736, 738 to use 589 transfers and servicing 1146, 1169–1171 vacation rights 648, 649 risk(s) ASC 275 199–203 collaborative arrangements 861 concentration vulnerability 201–202 concepts/rules/examples 200–203 definitions 200 disclosures 199–203, 1332 fair value 200, 963, 965–967, 971, 975–981 free rate adjustments 456, 458 free translation 367–368, 371–372 geographic vulnerability 202 insurance 367–368, 371–372, 1346 near term 200 neutral valuations 710, 713 nonpayment risks 891, 1158–1159 operational nature 200 perspectives/issues 199 plan accounting 1275 premiums 967 presentation 1332 real estate sales 433–434 receivable characteristics 226 and rewards 433–434, 861 scope to ASC 275 199 severe impacts 200 uncertainties 199–203 rollover method 133 roll-ups 819 royalties 1206, 1207 SAB see Staff Accounting Bulletin sabbatical leave 648, 649 sale-leaseback transactions 1042, 1047, 1062, 1081, 1087–1092, 1410 sales see also real estate sales ASC 815 903–904 collection uncertain 621–629 costs 645 counterparty inventory 1122–1123 derivatives 903–907, 912, 919–928, 931–934, 943–959 films 1197 Index financial assets 1413–1415 franchisors 1249–1253 future revenue 500, 1037–1038 goods’ ownership 331–334 guaranteed minimum resale value 1061 held-to-maturity securities 263–264 incentives 641–642 income statements 78 inventory 330–336, 340–365, 1122–1123 leases 1047, 1061–1062, 1107–1108 long-lived asset disposal 32, 399–404, 423–426 mortgages 1241–1247 normal purchases/sales 903–904 par/no-par stocks 560–561 partial interest transfers 1161 productive assets 1117, 1124 property, plant and equipment 423–427 real estate 1285–1289, 1299–1302 receivables 222–227, 231–238, 245, 251–256 refunds/rebate incentives 471 relative sales value 364 retail land 1298–1299 retained interests 1160–1163 return rights 629–633 software 1308–1309, 1310, 1314–1315 time-sharing activities 1299–1302 title plant 1249 undervalued assets 596 value computation 428–429, 1284, 1287 sales-type leases 1062–1063, 1070–1072, 1101–1102, 1103–1104, 1171–1172 SAR see stock appreciation rights Scholes, Black-Scholes-Merton formula 710, 718–719, 722–729 scrip dividends, equity 568 seasonality, interim reporting 182 SEC see Securities and Exchange Commission sections, codification secured borrowing 1143, 1144, 1145, 1415–1416 secured claims 1132 securities see also debt securities; equity securities available-for-sale securities 64, 66–67, 101, 259, 262, 266–278, 950 classification 262 comprehensive income 64, 65 convertible securities 143, 150, 158–159, 168–170, 511–527, 536–537 credit quality 222–223, 227–228, 244–255 definitions 558 dilutive securities/EPS 143, 150–156, 160–163, 165–170 earnings per share 144, 145–146, 150–156 GNMA issuance 1147, 1242, 1246 held-to-maturity 101, 263–264, 268–269, 271–278 impairment 1341–1343 investments 257–282, 316, 321–322, 1237, 1340–1343 lending 58, 1155, 1177–1178, 1415–1416 mortgage banking 1242 receivables 222–223, 227–228, 244–255 statement of cash flow 101 trading securities 101, 261, 262, 264–266, 268–271 securities custodian, definitions 48 Securities and Exchange Commission (SEC) codification overview 5, definitions 1–2 error corrections 133–134 Filer 1140 GAAP overview 1–2, 5, 8, 14 income statements 82 liability/equity characteristics 542, 546, 547–549 1469 materiality concept 16 notes to financial statements 103–105 quarterly interim reporting 183–185 registrant 542, 716, 729–730 research problems/procedures 14 revenue recognition 590–594 standards-setting processes stock compensation 716, 729–730 subsequent events 1140 securitizations beneficial interests 1171–1176 consolidations 878–879 definitions 1149 financial assets 317–319, 325–327 transfers and servicing 1149, 1151–1152, 1154, 1163, 1172–1176 segmenting contracts 599, 609–610 segment reporting 75test 208–209 aggregating segments 209–210 applicability of ASC 280 207 ASC 280 205–215 assets 208, 210, 212–214 balance sheets 211 benefits 205–206 CODM 207, 208–215 comparability 208, 213 concepts/rules/examples 207–215 customers 213 definitions 207 disclosures 205–215 entity-wide disclosures 212–213 geographic information 212–213, 215 interim period information 212 losses 208, 212–214 major customers 213, 215 measurement issues 210 operating segments 207, 208–215 overview 205–206 1470 perspectives/issues 205–206 practice alert 206 presentation 1332–1335 products 212, 215 profit and loss 208, 212, 214 reconciliations 212, 214–215 reportable segments 208–210, 213–214 restatements 213–215 revenue 208, 213–214 services 212, 215 tests 208–209 sellers see also sale property, plant and equipment 403–404, 427–443 receivables subject to future subordination 427, 432, 435, 1285, 1290–1292 transfers and servicing 1149 selling costs see also costs; sales cable television 1193 real estate 1279, 1281 software 1308–1309 selling price valuations 365 separability criterion, assets/ liabilities 812, 820–826, 828 separate contract aggregation 1061 separately-priced extended warranties 487, 495, 588, 620 separately reportable items 310 separate-valuation method 1212 service revenues 588–594, 614–621, 638–642 collection method 614, 617–618, 621–629 concepts/rules/examples 615–621 costs 614, 618–621, 645 definitions 614, 1359 expense recognition 614, 618–621 fees 614, 619–620 losses 619 performance methods 614, 616–617 perspectives/issues 614 product transactions 614, 615–616 Index recognition 588, 589–594, 614–621, 638–642 service transactions 614, 615–621 warranties 620–621 service(s) see also service revenues; servicing accounting guidance 620–621 business combinations 837–841 concession arrangements 1135–1137 condition of stock compensation 716 contracts 1185 costs of retirement benefits 665, 671, 673–676, 679–683, 686–690 disclosures 1359, 1413–1417 fees 1212, 1217–1219, 1223–1224 inception date 716 interest imputation 1030, 1031–1032 losses 608–609, 611, 619–621 notes issued in exchange for 1030, 1031–1032, 1036–1038 periods 710–711, 715, 718, 722, 837–841 plan accounting 1272 potential 394, 409, 418 and product transactions 614, 615–621 property/goods/services exchange 1030, 1031–1032, 1036–1038 retirement benefits, definitions 665 segment reporting 212, 215 stock compensation 710–711, 715, 718, 722 servicing see also service ; service revenues; transfers accounting for 1164–1171 amortization 1145, 1164–1165, 1167 ASC 860 1143–1179 assets 1163–1179, 1212, 1222 definitions 1145–1149 disclosures 1416–1417 fair value 1165, 1167–1168 fees 1241, 1245 financial assets 1143, 1144, 1146, 1149–1179, 1413–1417 leases 1171–1172 liabilities 1163–1179, 1212, 1222, 1416–1417 loan origination fees 1147–1148 mortgage loans 1244–1245 participation methods 1147, 1148, 1152–1157, 1160–1164 perspectives and issues 1143–1144 receivables 1166–1171 rights 1146, 1169–1171 scope of ASC 860 1143–1144 set-off rights 48, 1149, 1152 set for production, films 1197 settlement of an award 716 contracts 101, 160–161, 318, 320–323, 1344–1345 derivatives and hedging 911, 912, 957, 958 liability/equity characteristics 541–542, 551 life settlement 101, 318, 320–323, 1344–1345 net cash/share 541, 550–551, 911 of pension plans 32, 659, 665, 695–696 several liability obligations 445, 448, 1350 severe impacts, definition 200 share-based liabilities 732, 734, 1374 share-based payments/ compensation awards 559, 717 business combinations 836 equity 558–559 income taxes 767, 786–787 stock compensation 716, 718–721, 728–741 shared contracts 610–612 shareholders consolidations 874 distributions 570 Index equity 49, 56, 57, 61, 570 segment reporting 205–215 share options 717, 738 shares see also dividends; earnings per share; employee stock ownership plans; stocks capital stock 57, 559–562, 563–566, 572–574, 583 contingently issuable 143, 151, 165 definitions 540–542 disclosures 1328–1329 employee purchase plans 708, 738 equity 53–54, 540–543, 549, 552, 560–561 escrowed share arrangements 738 issuance 549, 552, 560–561 liabilities 542, 543, 549, 552 mandatorily redeemable 54, 540, 543–549, 552–553, 579–581, 911 net share settlements 541, 550–551, 911 own-share lending 516–517, 574 partially paid shares 162–163 preferred shares 155, 158, 164–167, 299–305, 546–552 proportionate ownership interest 1148, 1154–1155 put options on fixed number 553 repurchase 543, 549–553, 573–574 units 717 weighted-averages 142, 145–170 short-term inducements 709, 717 short-term investments 50, 219 short-term obligations 47, 50, 500, 508–511 sick pay 648–649 significant estimates, property, plant and equipment 422 significant influence, equity method 288–289, 310–314 "silos" 892–893, 1051–1052 simple capital structures 145–150, 165–170 single-employer plans 656, 666 single goods LIFO approach 341 site restoration costs 413, 422, 450 size, real estate investments 1287–1289 slot machines, definitions 1195 software accounting methods 1308–1315 ASC 985 1306–1315 concepts/rules/examples 1308–1315 costs 203, 392–397, 1306–1309, 1311–1315 definitions 1307 delivery considerations 1309–1310, 1311 development 1306–1315 development assets 395, 1309, 1312 earnings 1309–1310 impairment 394–395 intangible assets 375, 392–397, 402 for internal use 395–397 leases 1308–1309, 1314 licensing 1306, 1309, 1314–1315 operational rules 1311–1314 perspectives/issues 1306–1307 R&D 1308–1309 real estate 1315 revenue recognition 1309–1315 sales 1308–1309, 1310, 1314–1315 website development costs 376, 397 sold assets, discontinued operations 1320–1321 SPE see special purpose entities special arrangements, loans 244 specialized industry GAAP: ASC 900s 1181–1315 special purpose entities (SPE) 878–895, 1301, 1302 special termination benefits 653 1471 specific performance methods 614, 616 spending caps 604–605 spending rates, not-for-profit entities 1257 spin-offs 558, 559, 815, 857–858 split-dollar life insurance, definitions 667, 668 split interest agreements 1268 sponsors consolidations 877, 899 plan accounting 1272, 1274 R&D 752, 877, 899 retirement benefits 666 spot rates 913, 1197 spring lock-box arrangements 505 Staff Accounting Bulletin (SAB) 16 stand-alone valuations 634, 635, 977 standard costing, inventory 362–364 standards see Accounting Standards Codification ; Accounting Standards Updates; Financial Accounting Standards Board standby letter of credit 230, 485–486, 488–489, 491 standstill agreements 288 start-ups 745, 747, 748 statement of cash flows ASC 230 83–101 assets 93 available-for-sale 101 cash equivalents 84, 85, 96–98, 100 cash flow per share 91 cash receipts 85–87 classification 85–88 concepts/rules/examples 85–101 consolidated entities 100 definitions 84–85 depository/lending services 1222–1223 derivatives and hedging 92 development stage entities 101 direct methods 84, 88–100 disbursements 85–88 disclosures 87–88, 100–101, 1325–1326 1472 discontinued operations 91 dividends 96 equity 93 expenses 97 extraordinary items 91 fair value 84, 98 fair value options 992 financing activities 85–88, 99, 101 foreign currency 92, 101, 995, 997 gains 96 gross transactions 91, 92–100 hedging 92 held-to-maturity 101 income taxes 96, 97, 100 indirect methods 84, 85, 88–100 insurance contracts 324 interest 97, 100 inventories 97 investing activities 85–88, 99, 101 investment companies 1237 liabilities 93 life settlement contracts 101 net income 91, 92–100 not-for-profit organizations 91–92 operating activities 85–91, 96, 99–100 overview 84 perspectives/issues 83–84 preparation steps 92–100 presentation 88–91, 1325–1326 receipts 85–88 reconciliation 85, 88–100 scope to ASC 230 83 securities 101 stockholders equity 93 T-accounts 92, 96, 98 taxes 96, 97, 100 trading securities 101 statement of change in net assets in liquidation 32 statement of changes in equity 1385 statement of earnings see also statement of income and retained earnings cash flows 94 debt 517 stock compensation 741 Index statement of financial condition 192 statement of financial performance 952–955 statement of financial position balance sheets 48–59 debt 508–511 derivatives 952–955 highly aggregated balance sheets 54–55 highly detailed balance sheets 55–57 income taxes 759–760, 763–765, 796 insurance contracts 323–325 leases 1113 not-for-profit entities 1258–1259 statement of income and comprehensive income 65, 66–70, 75–82 statement of income and retained earnings accounting changes 114–121, 124 balance sheets 46, 54–55, 57 cash flow statements 93–97, 100 error corrections 128–131 foreign currency 999–1003, 1006–1007, 1017–1018 statement of net assets available for benefits 1273–1277 statement of net assets in liquidation 32 Statements of Financial Accounting Concepts (CON) ASC 105 15, 16–27 CON 590 CON 626 CON 18, 23–27, 492–494, 881–894 CON 16–21 definitions 22–23 elements of financial statements 21–23 guarantees 492–494 measurement considerations 21, 23–27 present value techniques 23–27 qualitative characteristics 18–21 revenue recognition 590 sales when collection uncertain 626 statement of shareholder equity 61 statement titles 76 status change reporting 784–785, 793 statutory deductibility limitation 768 stay provisions 1130 step acquisitions 848–851 step interest securities 1237, 1238 steps 1-8 of acquisition method 818–848 stock see also common stock; employee stock ownership plans; preferred stock; stock options; treasury stock appreciation rights 719, 732–734, 735–736, 738 capital stock 57, 559–562, 563–566, 572–574, 583 consolidated subsidiary stocks 513 contingent stock agreements 143, 1044, 1095–1096 convertible debt 513, 526–527 convertible preferred stock 579 dividends 146–150, 559, 568–570, 1358 issuance 559–562 mandatorily redeemable stock 552–553, 579–581 no-par stocks 560–561 ownership plans 143, 708, 712, 721–732, 741–742, 743, 786–787 payments 160 potential common 142–145, 160–166 splits 146–150, 559, 1358 subscriptions 562–563 transactions 558, 559–575 warrants issued with debt 526–527 stock appreciation rights (SAR) 719, 732–734, 735–736, 738 stock compensation ASC 718 708–743 Index awards 709–710, 713, 715–738 binomial models 719, 722, 724–729 Black-Scholes-Merton formula 710, 718–719, 722–729 calculated value 710, 729 call options 710, 714, 723–724 classification 719–720 clawback feature 722, 738 closed-form models 710, 719, 722–728 concepts/rules/examples 718–743 contributory plans 708, 712, 721–732, 741–742, 743 costs 718–737 disclosures 740–741, 1373–1376 employees 708, 711–712, 718–732 employee share purchase plans 708, 738 employee stock ownership plans 708, 712, 721–732, 741–742, 743 equity 708, 719–720, 732–736 ESOP 708–713, 717–732, 738–739, 741–743 expenses 1373–1376 fair value 709, 712, 718, 720–736 grant date 712–713, 718–719, 722–723, 743 income taxes 708, 736–737, 741–742 intrinsic value 713, 720, 729–730, 732, 736–737 lattice models 713, 718–719, 722, 724–729 liabilities 708, 719, 732–736 market condition 713, 738 measurement 713, 718–732, 735–736 modified awards 713, 721, 734–736, 738 nonpublic entities 713–714, 720, 729–730, 732, 738–739 options 710, 714, 721–737 ownership plans 708, 712, 721–732, 741–742, 743 payments in lieu of dividends on options 739–740 perspectives/issues 708–709 public entities 714, 728, 732 recognition 720–721, 736–737 reload feature/options 715, 7396 scope of ASC 718 708 SEC registrant 716, 729–730 share-based payments/ compensation 716, 718–721, 728–741 share purchase plans 708, 738 stock appreciation rights 732–734, 735–736, 738 stock options 709, 718, 720–732, 734, 742–743 tandem awards 709, 717, 732–734, 738 taxes 708, 711, 712, 718, 736–737, 739, 741–742 valuation models 710, 713, 718–719, 721–732 vest/vesting 717, 718–720, 730–732 volatility 717–718, 719, 721–723 stockholders equity 93, 558, 559–575, 583 income taxes 758, 771, 793–796 stock options awards 709–710, 713, 715–738 compensation 709–710, 713, 715–738 constructive retirement 571 employees 720–732 employer’s 496 paid-in capital 564 third parties 577–578 straight line depreciation 410–411 "stranded costs" 1304–1305 stripping costs 366 structured notes 261, 281–282, 959 subcontracted servicing 1169 subcontractors 599, 602, 1185 subjective acceleration clauses 500, 505, 507 sublease 1093–1094 1473 subordination consolidations 877 real estate 1284, 1285, 1290, 1298 receivables 427, 432, 435, 1285, 1290–1292 retail land 1284 subscriber-related costs 1193 subsequent accounting 291–292, 306–307, 457–461 subsequent events 1139–1141, 1205, 1412–1413 subsequent measurement/ recognition 468–469, 781–783 subsequent period accounting 457–461 subsequent recovery of value 442 subsidiaries see also parent entities business combinations 817, 849–850, 858 comprehensive income 64 consolidations 877, 879, 882 earnings per share 144 equity method 288 fiscal year-end consolidations 1385–1386 income taxes 762, 788–792 substantial completion 599 substantive conversion features 505, 524, 530 substantive plans 671 summarized data reporting 183 sum-of-the years’ digits (SYD) depreciation 411–412 Superfunds 451, 452–453 supervisory goodwill 1210, 1214 supply contracts 1185 surplus notes 1228 surrender charges 321 surrender of control 1150–1152, 1156, 1176 suspense shares 709, 717 swap rate 911, 948–949 swaps 911, 935–941, 948–949 SYD (sum-of-the years’ digits depreciation) 411–412 syndications 443–444, 1148 synthetic leases 893–895 systematic expenses allocation 74 systematic risk 967 1474 tabular format disclosures 377, 683, 952–953, 991, 1324, 1365 T-accounts 92, 96, 98 take-or-pay contracts 474–475, 913 takeover defense 573 tandem awards 709, 717, 732–734, 738 tangible assets 51–52, 399–444, 827–843 tangible product exclusions 1310 taxable temporary differences 763, 764–765 tax collection 594 tax credits 767–768, 769–771, 792 tax-deductible asset reductions 766–767 tax-deductible goodwill 769, 783, 843 taxes see also income taxes ASC 740 757–809 balance sheets 57 business combinations 812, 841–843 comprehensive income 67–70 definitions 760–763 disclosures 100, 203 earnings per share 165 interim reporting 179 investment companies 1237 limited liability entities 189 nontaxable transactions 384, 769, 784, 857 offsets 447 payroll taxes 739 personal property 745, 748–749 real estate 745, 748–749, 1280 revenue recognition 594 statement of cash flow 96, 97, 100 stock compensation 708, 711, 712, 718, 736–737, 739, 741–742 taxable income 762–763, 1212–1213 tax-exempt borrowing 1027, 1029–1030 tax-exempt debts 1106–1107 Index Tax Increment Financing Entities (TIFE) 1282–1283, 1315 tax law 783–785 taxonomy, codification, GAAP ASC 105 7–11 tax-planning strategies 763, 777–778 tax position, definitions 762 tax status 188–189, 784–785, 1377–1378 tax strategies 777–778 TDR see troubled debt restructuring technology-based intangible assets 830 technology reengineering costs 745, 749 television 749, 829, 1188–1195 temporary differences, income taxes 761, 763, 764–769, 771, 783–786, 793 temporary idling 426–427, 453 temporary impairment 270, 271–278 tenancy-for-years 1300 tentative minimum tax 763 terminal value 1132 terminated defense contracts 1186 terminated plan accounting 1278–1279 terminating leases 1100–1102 termination benefits business combinations 835–836 definitions 653 employees 369, 466, 467–470, 697–699, 721, 1351 exit/disposal cost obligations 467–468 onetime 467–468, 835–836 retirement benefits 666, 698 stock compensation 743 termination costs, employees 467–470, 697–698, 721, 1351 terms see definition of terms terms of share-based payment awards 559, 717 territory, films 1197 tests/testing see also impairment testing segment reporting 208–209 software 1307 third parties collaborative arrangements 861–862 credit enhancement 965, 978–979, 988 equity issuance 577 investment companies 1238 lease transactions 1047, 1107–1108 liability valuation 965, 978–979, 988 long-term construction contracts 611–612 revenue recognition 595 stock options 577–578 thrift mergers 1214–1215 through-put contracts 474–475 TIFE see Tax Increment Financing Entities time-and-materials contracts 603, 604 time-based depreciation 410–413 time of issuance 505, 508 timeliness of financial information 20 time period determination 1029 time of restructuring 230, 505 time-sharing activities 1299–1302 time value, stock compensation 717 timing of adoption decisions 107 timing of impairment testing 381–382 timing of income statements, 225 73 timing of recognition 454, 467–468 timing of risks 368, 371–372 title income statements 76 transfers 1084–1086 title plants 1247–1249 trade notes payable 52–53 trade-offs 20–21 trade receivables 234–235 trading securities 101, 261, 262, 264–266, 268–271 trading/trading purposes of derivatives 913, 955 transaction boundaries 821–822 Index transactions advertising barter transactions 1359 assets 138, 1116, 1117, 1124, 1382–1383 barter 594–595, 1115, 1124–1125, 1188, 1191–1192, 1200, 1359 bill-and-hold transactions 591 blind pool transactions 444 bootstrap 853–854 business combinations 815–816 capital transactions 312–313 common control transactions 189 costs 967, 982 disclosures 1380–1417 equity 298–314, 558, 559–575 foreign currency 995, 996, 997, 1011–1014, 1407 gains 997, 1005, 1008–1014, 1118, 1125, 1383 gross transactions 91, 92–100 hedging 910, 935, 950–951, 1388–1395 hypothetical transactions 977–979 income taxes 758, 771, 793–796, 1125 intercompany transactions 307–309, 1013–1014 inventory 1115, 1122–1123 leases 1042, 1047, 1062, 1081, 1087–1092, 1108–1109 losses 997, 1005, 1008–1014, 1118, 1125, 1383 nonmonetary transactions 1115–1126 orderly transactions 966, 975 products 614, 615–621 real estate 1089–1092, 1122 reload transactions 1301 revenue 589–598, 1359 sale-leaseback 1042, 1047, 1062, 1081, 1087–1092, 1410 services 614, 615–621 stock 558, 559–575 transferees/transferors 1149, 1150–1179 transfer pricing 210 transfers see also exchanges; servicing accounting for 1156–1157 ASC 860 1143–1179 assets 1143, 1144, 1146, 1149–1179 available-for-sale securities 260–263, 268–271 bankruptcy 1145, 1151, 1155–1156 beneficial interests 1145, 1155–1156, 1162–1163 borrowings/collateral 1143, 1144, 1145, 1158–1161, 1178–1179 cash flows 1145, 1155–1175 collateral 1143, 1144, 1145, 1158–1161, 1178–1179 concepts/rules/examples 1149–1179 control 1145, 1149–1177 debt securities 222–223, 227–228, 244–255, 263–264, 268–271 definitions 1145–1149 depository/lending services 1219–1220 derivative financial instruments 1145, 1157 equity characteristics 542, 543 equity securities 263–264, 268–271 fair value 1156–1157, 1158–1160 financial assets 1143–1146, 1149–1179, 1413–1417 financial instruments 542, 543, 1145, 1146–1147, 1157 gains 1158–1171 interest-only strips 1157, 1167, 1169–1170, 1173–1176, 1179 interest retainment 1160–1163 leases 1171–1172 liability/equity characteristics 542, 543 loans 1143, 1155, 1157, 1160–1165, 1169–1179 1475 depository/lending services 1219–1220 origination fees 1147–1148 securities 222–223, 227–228, 244–255 losses 1158–1171 measurements 1157 not-for-profit entities 1263–1264 participation methods 1147, 1148, 1152–1157, 1160–1164 perspectives and issues 1143–1144 receivables 222–223, 226–228, 244–255, 1143–1144, 1157–1163 recognition 1145, 1150, 1156–1157 recourse 1148, 1149, 1157–1160, 1173 repurchase agreements 1145–1146, 1148, 1153–1154, 1176–1177 retained interests 1160–1163 rights 1146, 1169–1171 scope of ASC 860 1143–1144 securitizations 1149, 1151–1152, 1154, 1163, 1172–1176 value 314 transit of goods 332–335, 588 transition assets 657–659, 664, 671 transition obligations 671 Transition Resource Group (TRG) 598 translate-restate, definition 139 translation financial statements 995, 996–1014, 1407–1408 foreign currency 995, 996–1014, 1022 transportation costs 968, 982–983 treasury stock constructive retirement method 571–572, 573 cost method 570–571, 572–573 disclosures 1359 earnings per share 145, 146, 152, 154–155, 164 equity 570–575, 1359 1476 par value method 571, 572–573 share repurchase programs 573–574 takeover defense 573 TRG see Transition Resource Group troubled debt restructuring (TDR) ASC 470 500, 501, 505, 532–537 assets 534, 1339–1340 by creditors 222, 223–224, 230, 255–256, 533–534, 1339–1340 by debtors 500, 501, 505, 532–537 concessions 255–256, 533–534 debtors 1356 disclosure 1339–1340 financial difficulty 503, 505, 532–533 receivables 222, 223–224, 230, 255–256 recognition 534–536 value 533–534 trustees 1132, 1257, 1263–1264 turnover 666 two-class common stock 150 two-class method, EPS 150–151, 156–161 ultimate participation costs 1203–1204 ultimate revenue 1196, 1201–1205 UMIFA see Uniform Management of Institutional Funds Act unallocated contracts 666 unallocated ESOP shares 165 unamortized film cost valuation 1201–1205 unasserted claims/assessments 481 uncertainty accounting ASC 275 199–203 concentration vulnerability 201–202 concepts/rules/examples 200–203 definitions 200 disclosures 199–203, 1332 Index fair value 200 geographic vulnerability 202 income taxes 778–783 interim reporting 181–182 near term 200 operational nature 200 perspectives/issues 199 plan accounting 1275 presentation 1332 scope to ASC 275 199 severe impacts 200 vulnerability from concentrations 201–202 uncollectibles income taxes 759, 770, 785 receivables 232–235, 248–250, 618, 622, 626–628 sales with uncertain collection 621–629 time-sharing activities 1301–1302 valuation allowances 232–235, 248–250 unconditional obligations liability/equity characteristics 552 promise to give 747 purchase obligations 473, 474–475, 1393 uncorrected misstatement evaluations 132–135 underlyings 491, 877, 913, 915, 952 undersecured claims 1132 understandability 20 undervalued asset sales 596 underwriting risk 368, 371–372 undistributed earnings 788–792 unearned discounts 59 unfunded accumulated postretirement benefit obligation 671 unfunded projected benefit obligation 666 unguaranteed residual value 1042, 1047 Uniform Capitalization (UNICAP) 364–365, 769 Uniform Management of Institutional Funds Act (UMIFA) 1265–1267 unilateral ability 1149 union employees 468 “unit of accounting” 271, 390–391, 408, 972 unit-price contracts 603, 604 unit production depreciation methods 412–413 units of accounting 635, 636 units-of-delivery method 605 units-of-revenue method 505 unknown potentially responsible party 453, 462 unobservable fair value inputs 968 unproven potentially responsible party 453, 462 unrealizable assets 773–778 unrealized gains 197, 214, 264–304, 567 unrecognized amount at initial ASC 715 application 680–681 unrecognized tax benefits 763 unrelated business income 763 unrelated parties, definition 1047 unsecured claims 1132 unsystematic risk 968 unusual items disclosures 1325 income statements 72, 80–81 income taxes 797, 804–806 unusual nature see extraordinary items unwarranted gain recognition 596 urban consumer price index 137 use change costs 1281 useful lives economic life 830–831 intangible assets 380, 386–389, 402, 830–831 vacation rights 648, 649 vaccine stockpiles 642 valuation business combinations 825–826 depository/lending services 1212 fair value 961–983 inventory 335–366 models 710, 713, 718–719, 721–732 mortgage-backed securities 1242, 1244 Index stand-alone valuations 634, 635, 977 stock compensation 710, 713, 718–719, 721–732 techniques 825–826, 1212 unamortized film costs 1201–1205 valuation allowances business combinations 842–843 collateralized loans 441–442 deferred income taxes 773–778, 784 definition 763 disclosures 108 income taxes 763, 773–778, 784, 801 intangible assets 827–843 interim periods 801 notes to financial statements 108 tangible assets 827–843 uncollectible amounts 232–235, 248–250 value see also fair value ; present value ; residual values asset retirement obligations 450–461 carrying value 850–851 convertible securities 511– 527 costs increasing asset value 409 intrinsic value 520–524, 713, 720, 729–730, 732, 736–737, 911, 925, 927 market-related 663, 677 real estate sales 428–429, 1284, 1287 reorganizations 1132 TDR 533–534 transference 314 value in use 139 variability consolidations 873 expected variability 873, 881–882 variable costing see direct costing variable interest entities (VIE) business combinations 815, 819, 858 consolidations 872, 873, 876, 877–898 contingencies 479 fair value 968 guarantees 491 initial measurements 886–895 intangibles 380 interim reporting 174 leases 1043, 1047–1060 measurements 886–895 primary beneficiaries 876, 879, 883–888, 1386–1388 real estate 1302 recognition 886–888 related parties 883–888 “silos” 892–893, 1051–1052 time-sharing activities 1302 transfers and servicing 1151, 1152 variable interests see also variable interest entities consolidations 877–878, 879–880 definitions 877–878 leases 1047, 1051–1052 “silos” 892–893, 1051–1052 variable-rate forward contracts 542, 543, 553 variable settlement dates 553 variable terms of conversion 521–523 vendors 471, 634, 635, 639–642 vendor-specific objective evidence (VSOE) 634, 635, 1310–1312 venture investments 443 vesting compensated absences 648 retirement benefits 666, 686 stock compensation 717, 718–720, 721, 722, 730–732 VIE see variable interest entities violation of a provision 505 volatility, stock compensation 717–718, 719, 721–723 voluntary benefits 469 1477 voluntary change methods 738–739 voluntary health and welfare organization 1257, 1258–1259, 1261, 1265 voting common stock 313–314 VSOE see vendor-specific objective evidence vulnerability from concentrations 201–202 warehousing 1173 warranties ASC 460 485, 487, 491, 494–495 guarantees 485, 487, 491, 494–495 separately-priced extended 487, 495, 588, 620 service revenue recognition 620–621 transfers and servicing 1149 warrants convertible securities 519–521 detachable warrant bonds 500, 503, 526–527 earnings per share 145, 150, 159–160 equity 582–583 issued with debt 526–527 liability/equity characteristics 542, 543–544 put warrants 582–583 waste obligations 461–463, 745, 749 weather derivatives 491, 902, 959, 1396 website development 376, 397, 402 weighted-average assumptions 682–683, 690 weighted-average method 142, 145–170, 354–355 weighted-average number of common shares outstanding 145–156, 168–170 welfare benefits plans 1270–1279 welfare organization 1257, 1258–1259, 1261, 1265 1478 wholesalers 213, 365, 769, 1203, 1211, 1220 WIP see work-in-progress withholdings, balance sheets 53 with/without cause 878 working capital 47, 505 working models, software 1307 work-in-progress (WIP) 599, 600, 601–602, 603 Index wrap-lease transactions 1108–1109 write-off method 232, 627, 785 written put options 53, 551, 553 year-end financial statements 689–690 year-end measurements 280–282 Index compiled by Indexing Specialists (UK) Ltd years-of-service amortization method 679–680 year-to-date diluted EPS 166–167 yields accretable 225, 245, 1211 effective yield method 315–316 zero-coupon method 913 WILEY END USER LICENSE AGREEMENT Go to www.wiley.com/go/eula to access Wiley’s ebook EULA ... 65-64604280 Email: enquiry @wiley. com.sg GAAP 2015 Interpretation and Application of GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Joanne M Flood This edition first published 2015 © 2015 John Wiley & Sons Ltd... Preface 1 ASC 105 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Perspectives and Issues What is GAAP? Recognition principles Disclosure principles History of GAAP Pre Codification GAAP Hierarchy SEC... implementation of the Accounting Standards Codification, FASB issued several types of pronouncements and used the following GAAP hierarchy (FAS 162, The Hierarchy of Generally Accepted Accounting Principles)