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Choose one chapter from the topics that we have covered or will cover in class (see week-wise schedule for the list of topics). I will like students to choose different chapters as far as possible. At the end of the chapter, there are two codification exercises: 1. The first one is at the end of the chapter prior to the end of chapter questions. It has light yellow back ground. You have to provide three or four level codification references as well as the actual text of the GAAP from the codification database to get credit. An example of three level codification reference is 805-10-30. An example of four level codification reference is 720-35-05-3. Note that the GAAP text resides in the paragraphs which can be located by three- or four-level reference. Please also provide the search string that you used to located the GAAP text in the database. 2. The second is at the end of the chapter after the end of chapter questions. It has light green background and is titled “Professional Research: FASB Codification”. It is listed under BRIDGE TO THE PROFSSION section. Here you have to write a professional research report answering each question separately. Cite actual text from codification to support your position and also provide three or four level codification reference. Please also provide the search string that you used to located the GAAP text in the database. FIRST ONE: If your school has a subscription to the FASB Codification, go to http://aaahq.org/asclogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses. CE12.1. Access the Codification glossary (“Master Glossary”) to answer the following. (a) What is the definition provided for an intangible asset? (b) What is the definition of goodwill? (c) What is the definition of research and development (R&D)? (d) What is a development stage entity? CE12.2. Your friend Harry does not understand the concept of an indefinite-life intangible asset. He wonders, “Does this mean the life is infinite?” What does the authoritative literature say about indefinite-life intangible assets? CE12.3. What guidance does the Codification provide concerning the disclosure of research and development (R&D) costs? CE12.4. What is the nature of the authoritative guidance for advertising costs for entertainment companies? SECOND ONE Bridge to the Profession Professional Research: Fasb Codification King Company is contemplating the purchase of a smaller company, which is a distributor of King”s products. Top management of King is convinced that the acquisition will result in significant synergies in its selling and distribution functions. The financial management group (of which you are a part) has been asked to prepare some analysis of the effects of the acquisition on the combined company”s financial statements. This is the first acquisition for King, and some of the senior staff insist that based on their recollection of goodwill accounting, any goodwill recorded on the acquisition will result in a “drag” on future earnings for goodwill amortization. Other younger members on the staff argue that goodwill accounting has changed. Your supervisor asks you to research this issue. Instructions If your school has a subscription to the FASB Codification, go to http://aaahq.org/asclogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses. a. Identify the accounting literature that addresses goodwill and other intangible assets. b. Define goodwill. c. Is goodwill subject to amortization? Explain. d. When goodwill is recognized by a subsidiary, should it be tested for impairment at the consolidated level or the subsidiary level? Discuss. Codification Goals The FASB had three primary goals in developing the Codification: 1. Simplify user access by codifying all authoritative US GAAP in one spot. 2. Ensure that the codified content accurately represented authoritative US GAAP as of July 1, 2009. 3. Create a codification research system that is up to date for the released results of standard-setting activity. Simplifying user access to all authoritative US GAAP required a structural overhaul that changed from a standards-based model (with thousands of individual standards) to a topically based model (with roughly 90 topics). As discussed in the section of this Notice titled Content Matters, the authoritative version of the Codification released on July 1, 2009, includes all level (a)-(d) US GAAP standards issued by a standard setter. The Codification does not codify nonauthoritative US GAAP such as practice, textbooks, articles, and other similar content. Codifying the vast amount of previous standards was a combination of art and science. As a means of ensuring that the codified content accurately represents standards as of July 1, 2009, the FASB instituted several levels of review and also used a monitoring system to track all activity. However, as discussed at a meeting of the FASB, combining disparate standards into a codified format introduces the possibility of unintentional changes. The Board believes that the level of unintentional changes will be limited, but the FASB staff will evaluate any such assertions by users and advise the Board as necessary. In addition to developing the Codification, the FASB developed the FASB Accounting Standards Codification™ Research System (Codification Research System) to streamline the research process. The FASB”s intent is to update the Codification Research System concurrent with the release of the results of standard-setting activities (Accounting Standards Updates as discussed latter in this Notice) to ensure that users have the benefit of the most current content. Among other things, the Codification is expected to: 1. Reduce the amount of time and effort required to solve an accounting research issue 2. Mitigate the risk of noncompliance through improved usability of the literature 3. Provide accurate information with real-time updates as Accounting Standards Updates are released 4. Assist the FASB with the research and convergence efforts. October 2, 2009 (v 3.0) © 2009 Financial Accounting Foundation 6 of 40 Codification Research System As mentioned previously, the FASB developed the FASB Accounting Standards Codification™ Research System (Codification Research System) to streamline the research process. The Codification Research System has numerous features to assist subscribers with research, and the home page includes a link to an online tutorial that describes how to use the system. The benefit of performing research using the Codification is that users will be able to identify all related content in one location much more easily than researching the thousands of previous standards. The FASB suggests the following steps when conducting research: 1. Browse the topical structure and related tables of contents. Because all related content is organized topically, users should be able to identify most content by topical browsing. Based on direct feedback, more than ninety percent of users responded that they know the topic that they need to research. 2. Subscribers should use the text search feature only for very specific items (for example, guidance about inducements). Text search is based on specific language. Deviations from a selected search expression will lead to certain relevant content being excluded from search results. The Codification Research System does incorporate certain tools to help overcome the issue, but searching will always be constrained. October 2, 2009 (v 3.0) © 2009 Financial Accounting Foundation 7 of 40 Content Matters Population of codified standards as of July 1, 2009 Standards issued by standard setters other than the SEC The Codification includes all authoritative literature (defined as level (a)–(d) US GAAP of the previous US GAAP hierarchy) issued by a standard setter. It does not include standards for state and local governments. The source of the standards was the as-amendedversions as provided by the standard setter. Therefore, the Codification does not identify documents that solely amend other standards. For example, FASB Statement No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, is an amendment of FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities,so the content of Statement 149 is included through the as-amended version of Statement 133. As of July 1, 2009, the Codification was composed of the following literature issued by various standard setters: 1. Financial Accounting Standards Board (FASB) a. Statements (FAS) b. Interpretations (FIN) c. Technical Bulletins (FTB) d. Staff Positions (FSP) e. Staff Implementation Guides (Q&A) f. Statement No. 138 Examples. 2. Emerging Issues Task Force (EITF) a. Abstracts b. Topic D. 3. Derivative Implementation Group (DIG) Issues 4. Accounting Principles Board (APB) Opinions 5. Accounting Research Bulletins (ARB) 6. Accounting Interpretations (AIN) 7. American Institute of Certified Public Accountants (AICPA) a. Statements of Position (SOP) b. Audit and Accounting Guides (AAG)—only incremental accounting guidance c. Practice Bulletins (PB), including the Notices to Practitioners elevated to Practice Bulletin status by Practice Bulletin 1 d. Technical Inquiry Service (TIS)—only for Software Revenue Recognition. October 2, 2009 (v 3.0) © 2009 Financial Accounting Foundation 8 of 40 Standards issued by the SEC To increase the utility of the Codification for public companies, relevant portions of authoritative content issued by the SEC and selected SEC staff interpretations and administrative guidance have been included for reference in the Codification, such as: 1. Regulation S-X (SX) 2. Financial Reporting Releases (FRR)/Accounting Series Releases (ASR) 3. Interpretive Releases (IR) 4. SEC Staff guidance in: a. Staff Accounting Bulletins (SAB) b. EITF Topic D and SEC Staff Observer comments. The section titled Securities and Exchange Commission (SEC) Sections provides technical information on how SEC content is presented. The SEC Sections do not contain the entire population of SEC rules, regulations, interpretive releases, and staff guidance. For example, the Codification does not include all content related to matters outside the basic financial statements, such as Management”s Discussion and Analysis (MD&A), or to auditing or independence matters. Content in the SEC Sections is expected to change over time in accordance with the SEC”s normal procedures for making changes to SEC rules, regulations, interpretive releases, and staff guidance. The SEC”s normal update procedures are not changed by the inclusion of SEC content in the Codification, and, accordingly, there may be delays between the release of the SEC”s changes and updates to the Codification. The Codification does not replace or affect guidance issued by the SEC or its staff for public companies in their filings with the SEC. Furthermore, the content labeled as SEC staff guidance does not constitute rules or interpretations of the SEC, nor does such guidance bear official Commission approval. If you find any discrepancies between the SEC content as presented in the Codification and the underlying SEC content, please use the content feedback feature of the online Codification Research System to submit your comments. October 2, 2009 (v 3.0) © 2009 Financial Accounting Foundation 9 of 40 Essential and nonessential content Standards documents before July 1, 2009, typically contained two classes of content: 1. Essential standards and implementation guidance 2. Nonessential material. The goal of the Codification was to capture and codify the essential standards and implementation guidance as of July 1, 2009. The Codification excludes nonessential material such as redundant summaries of existing standards, historical content, discussions of previous practice, summaries of constituent feedback, and similar content. Generally, the nonessential material was located in the document summary, basis for conclusions, and similar appendixes. In almost all cases, when a standard was amended, the standard setter did not amend nonessential content when it amended the related standard, so the nonessential content became outdated. In some cases, certain content from the standards section of a standard was deemed nonessential and, therefore, the Codification excludes such content. In other cases, the basis for conclusions or similar appendixes contained content deemed useful to understanding the standard, and, therefore, the Codification includes that content. Users can identify the essential material and the sources of such information with either the Printer-Friendly with Sources or the Cross Reference report described in the following section. Cross-referencing between standards and the Codification The Codification includes a Cross Reference report that allows users to identify where previous standards reside in the Codification, or the standards contained in a specific location in the Codification. The report displays a detailed list of all content included in the Codification together with the specific location(s) within the Codification. 1. If the Cross Reference report lists the source of the content, then the FASB deemed the content as authoritative material for purposes of the Codification. 2. If the Cross Reference report does not list the source of the content from existing authoritative literature, then the FASB deemed it as superseded or nonessential. For each piece of standards content used in the Codification, the Cross Reference report includes the following information: 1. Standards. Standard type, number, paragraph, and sequence number. See Appendix B for a discussion of sequence numbers. 2. Codification. Topic, Subtopic, Section, and paragraph. Grandfathered content excluded from the Codification as of July 1, 2009 General The authoritative release of the Codification as of July 1, 2009 excludes grandfathered material. Users need to access the relevant standards for such grandfathered items. See the items below and Codification Section 105-10-70 for a discussion of grandfathered material. October 2, 2009 (v 3.0) © 2009 Financial Accounting Foundation 10 of 40 Business Combinations Topic 805, Business Combinations, was created using only FASB Statement No. 141(R), Business Combinations (revised), and related content. It excluded content from FASB Statement No. 141, Business Combinations, and related standards. To maintain a consistent presentation, Topic 805 presents all content as pending content even though some content applies to business combinations before the effective date of Statement 141(R). See Codification paragraph 805-10- 65-1 for the effective date. Accordingly, for business combinations applicable before the effective date in Codification paragraph 805-10-65-1, users need to access Statement 141 and any other relevant standards. Income Taxes The FASB used December 31, 2008, as the target effective date for purposes of authoring the Codification. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, was originally effective for fiscal years beginning after December 31, 2006. As a result, the Codification included Interpretation 48 and its related amendments and excluded certain content that was superseded by Interpretation 48. After the original issuance of Interpretation 48, the FASB issued three FASB Staff Positions to defer the effective date for certain nonpublic entities. The FASB issued FASB Staff Position No. FIN 48-3, Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises, that extends the effective date for fiscal years beginning after December 31, 2008. As a result, the Codification excludes content that was amended or superseded by FIN 48. Accordingly, nonpublic entities electing the deferral must access FASB Statement No. 109, Accounting for Income Taxes,and related standards that existed before the issuance of Interpretation 48. See Codification paragraph 740-10-65-1 for additional details. Pensions As indicated in Codification paragraph 715-20-65-1, during the Codification process, the FASB issued FASB Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,and FASB Staff Position No. FAS 158-1, Conforming Amendments to the Illustrations in FASB Statements No. 87, No. 88, and No. 106 and to the Related Staff Implementation Guides. Because those standards were effective beginning in 2006, the amended content was integrated into the Codification. However, the transition period had various phases such that different aspects were effective at different times. As a result of the extended effective date, Topic 715 (Compensation—Retirement Benefits) excludes pre-Statement 158 literature that may be applicable to certain entities. Transition guidance for first-time adopters of US GAAP The Codification eliminates transition guidance for all guidance that is fully effective as of December 31, 2008. However, entities that need to apply US GAAP for the first time may need to access the original standards to determine the relevant transition guidance. This is especially true for cases when there are long transition periods. October 2, 2009 (v 3.0) © 2009 Financial Accounting Foundation 11 of 40 Non-GAAP The FASB concluded that the Codification represents authoritative US GAAP. Therefore, the Codification does not include guidance for non-GAAP matters such as: 1. Other Comprehensive Basis of Accounting (OCBOA) 2. Cash Basis 3. Income Tax Basis 4. Regulatory Accounting Principles (RAP). Governmental accounting standards The Codification does not include governmental accounting standards. Audit guidance The Codification eliminated references to audit guidance. October 2, 2009 (v 3.0) © 2009 Financial Accounting Foundation 12 of 40 Structure and Style Matters Topical structure Illustration of the hierarchy The following figure provides the terminology and a visual representation using a partial hierarchy of the Leases Topic. Topic Subtopics Sections Subsections Leases Scope Disclosure Scope Disclosure Scope Disclosure

Choose one chapter from the topics that we have covered or will cover in class (see week-wise schedule for the list of topics). I will like students to choose different chapters as far as possible. At the end of the chapter, there are two codification exercises:

1. The first one is at the end of the chapter prior to the end of chapter questions. It has light yellow back ground. You have to provide three or four level codification references as well as the actual text of the GAAP from the codification database to get credit. An example of three level codification reference is 805-10-30. An example of four level codification reference is 720-35-05-3. Note that the GAAP text resides in the paragraphs which can be located by three- or four-level reference.

Please also provide the search string that you used to located the GAAP text in the database.

2. The second is at the end of the chapter after the end of chapter questions. It has light green background and is titled “Professional Research: FASB Codification”. It is listed under BRIDGE TO THE PROFSSION section. Here you have to write a professional research report answering each question separately. Cite actual text from codification to support your position and also provide three or four level codification reference.

Please also provide the search string that you used to located the GAAP text in the database.

FIRST ONE:

If your school has a subscription to the FASB Codification, go to http://aaahq.org/asclogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses.

CE12.1. Access the Codification glossary (“Master Glossary”) to answer the following.

(a) What is the definition provided for an intangible asset?
(b) What is the definition of goodwill?

 

(c) What is the definition of research and development (R&D)?
(d) What is a development stage entity?
CE12.2. Your friend Harry does not understand the concept of an indefinite-life intangible asset. He wonders, “Does this mean the life is infinite?” What does the authoritative literature say about indefinite-life intangible assets?

 

CE12.3. What guidance does the Codification provide concerning the disclosure of research and development (R&D) costs?
CE12.4. What is the nature of the authoritative guidance for advertising costs for entertainment companies?

SECOND ONE

Bridge to the Profession

Professional Research: Fasb Codification

King Company is contemplating the purchase of a smaller company, which is a distributor of King”s products. Top management of King is convinced that the acquisition will result in significant synergies in its selling and distribution functions. The financial management group (of which you are a part) has been asked to prepare some analysis of the effects of the acquisition on the combined company”s financial statements. This is the first acquisition for King, and some of the senior staff insist that based on their recollection of goodwill accounting, any goodwill recorded on the acquisition will result in a “drag” on future earnings for goodwill amortization. Other younger members on the staff argue that goodwill accounting has changed. Your supervisor asks you to research this issue.

Instructions

If your school has a subscription to the FASB Codification, go to http://aaahq.org/asclogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses.

a. Identify the accounting literature that addresses goodwill and other intangible assets.

b. Define goodwill.

c. Is goodwill subject to amortization? Explain.

d. When goodwill is recognized by a subsidiary, should it be tested for impairment at the consolidated level or the subsidiary level? Discuss.

Codification Goals

The FASB had three primary goals in developing the Codification:

1. Simplify user access by codifying all authoritative US GAAP in one spot.

2. Ensure that the codified content accurately represented authoritative US GAAP as of July 1, 2009.

3. Create a codification research system that is up to date for the released results of standard-setting activity.

Simplifying user access to all authoritative US GAAP required a structural overhaul that changed from a standards-based model (with thousands of individual standards) to a topically based model (with roughly 90 topics). As discussed in the section of this Notice titled Content Matters, the authoritative version of the Codification released on July 1, 2009, includes all level (a)-(d) US GAAP standards issued by a standard setter. The Codification does not codify nonauthoritative US GAAP such as practice, textbooks, articles, and other similar content.

Codifying the vast amount of previous standards was a combination of art and science. As a means of ensuring that the codified content accurately represents standards as of July 1, 2009, the FASB instituted several levels of review and also used a monitoring system to track all activity. However, as discussed at a meeting of the FASB, combining disparate standards into a codified format introduces the possibility of unintentional changes. The Board believes that the level of unintentional changes will be limited, but the FASB staff will evaluate any such assertions by users and advise the Board as necessary.

In addition to developing the Codification, the FASB developed the FASB Accounting Standards Codification™ Research System (Codification Research System) to streamline the research process. The FASB”s intent is to update the Codification Research System concurrent with the release of the results of standard-setting activities (Accounting Standards Updates as discussed latter in this Notice) to ensure that users have the benefit of the most current content.

Among other things, the Codification is expected to:

1. Reduce the amount of time and effort required to solve an accounting research issue

2. Mitigate the risk of noncompliance through improved usability of the literature

3. Provide accurate information with real-time updates as Accounting Standards Updates are released

4. Assist the FASB with the research and convergence efforts.

October 2, 2009 (v 3.0)

© 2009 Financial Accounting Foundation 6 of 40

Codification Research System

As mentioned previously, the FASB developed the FASB Accounting Standards Codification

Research System (Codification Research System) to streamline the research process. The

Codification Research System has numerous features to assist subscribers with research, and the home page includes a link to an online tutorial that describes how to use the system.

The benefit of performing research using the Codification is that users will be able to identify all related content in one location much more easily than researching the thousands of previous standards. The FASB suggests the following steps when conducting research:

1. Browse the topical structure and related tables of contents. Because all related content is organized topically, users should be able to identify most content by topical browsing.

Based on direct feedback, more than ninety percent of users responded that they know the topic that they need to research.

2. Subscribers should use the text search feature only for very specific items (for example, guidance about inducements). Text search is based on specific language. Deviations from a selected search expression will lead to certain relevant content being excluded from search results. The Codification Research System does incorporate certain tools to help overcome the issue, but searching will always be constrained.

October 2, 2009 (v 3.0)

© 2009 Financial Accounting Foundation 7 of 40

Content Matters

Population of codified standards as of July 1, 2009

Standards issued by standard setters other than the SEC

The Codification includes all authoritative literature (defined as level (a)–(d) US GAAP of the previous US GAAP hierarchy) issued by a standard setter. It does not include standards for state and local governments. The source of the standards was the as-amendedversions as provided by the standard setter. Therefore, the Codification does not identify documents that solely amend other standards. For example, FASB Statement No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, is an amendment of FASB Statement No. 133,

Accounting for Derivative Instruments and Hedging Activities,so the content of Statement 149 is included through the as-amended version of Statement 133.

As of July 1, 2009, the Codification was composed of the following literature issued by various standard setters:

1. Financial Accounting Standards Board (FASB)

a. Statements (FAS)

b. Interpretations (FIN)

c. Technical Bulletins (FTB)

d. Staff Positions (FSP)

e. Staff Implementation Guides (Q&A)

f. Statement No. 138 Examples.

2. Emerging Issues Task Force (EITF)

a. Abstracts

b. Topic D.

3. Derivative Implementation Group (DIG) Issues

4. Accounting Principles Board (APB) Opinions

5. Accounting Research Bulletins (ARB)

6. Accounting Interpretations (AIN)

7. American Institute of Certified Public Accountants (AICPA)

a. Statements of Position (SOP)

b. Audit and Accounting Guides (AAG)—only incremental accounting guidance

c. Practice Bulletins (PB), including the Notices to Practitioners elevated to Practice

Bulletin status by Practice Bulletin 1

d. Technical Inquiry Service (TIS)—only for Software Revenue Recognition.

October 2, 2009 (v 3.0)

© 2009 Financial Accounting Foundation 8 of 40

Standards issued by the SEC

To increase the utility of the Codification for public companies, relevant portions of authoritative content issued by the SEC and selected SEC staff interpretations and administrative guidance have been included for reference in the Codification, such as:

1. Regulation S-X (SX)

2. Financial Reporting Releases (FRR)/Accounting Series Releases (ASR)

3. Interpretive Releases (IR)

4. SEC Staff guidance in:

a. Staff Accounting Bulletins (SAB)

b. EITF Topic D and SEC Staff Observer comments.

The section titled Securities and Exchange Commission (SEC) Sections provides technical information on how SEC content is presented.

The SEC Sections do not contain the entire population of SEC rules, regulations, interpretive releases, and staff guidance. For example, the Codification does not include all content related to matters outside the basic financial statements, such as Management”s Discussion and Analysis (MD&A), or to auditing or independence matters.

Content in the SEC Sections is expected to change over time in accordance with the SEC”s normal procedures for making changes to SEC rules, regulations, interpretive releases, and staff guidance. The SEC”s normal update procedures are not changed by the inclusion of SEC content in the Codification, and, accordingly, there may be delays between the release of the SEC”s changes and updates to the Codification.

The Codification does not replace or affect guidance issued by the SEC or its staff for public companies in their filings with the SEC. Furthermore, the content labeled as SEC staff guidance does not constitute rules or interpretations of the SEC, nor does such guidance bear official Commission approval.

If you find any discrepancies between the SEC content as presented in the Codification and the underlying SEC content, please use the content feedback feature of the online Codification Research System to submit your comments.

October 2, 2009 (v 3.0)

© 2009 Financial Accounting Foundation 9 of 40

Essential and nonessential content

Standards documents before July 1, 2009, typically contained two classes of content:

1. Essential standards and implementation guidance

2. Nonessential material.

The goal of the Codification was to capture and codify the essential standards and implementation guidance as of July 1, 2009. The Codification excludes nonessential material such as redundant summaries of existing standards, historical content, discussions of previous practice, summaries of constituent feedback, and similar content. Generally, the nonessential material was located in the document summary, basis for conclusions, and similar appendixes. In almost all cases, when a standard was amended, the standard setter did not amend nonessential content when it amended the related standard, so the nonessential content became outdated.

In some cases, certain content from the standards section of a standard was deemed nonessential and, therefore, the Codification excludes such content. In other cases, the basis for conclusions or similar appendixes contained content deemed useful to understanding the standard, and, therefore, the Codification includes that content. Users can identify the essential material and the sources of such information with either the Printer-Friendly with Sources or the Cross Reference report described in the following section.

Cross-referencing between standards and the Codification

The Codification includes a Cross Reference report that allows users to identify where previous standards reside in the Codification, or the standards contained in a specific location in the Codification. The report displays a detailed list of all content included in the Codification together with the specific location(s) within the Codification.

1. If the Cross Reference report lists the source of the content, then the FASB deemed the content as authoritative material for purposes of the Codification.

2. If the Cross Reference report does not list the source of the content from existing authoritative literature, then the FASB deemed it as superseded or nonessential.

For each piece of standards content used in the Codification, the Cross Reference report includes the following information:

1. Standards. Standard type, number, paragraph, and sequence number. See Appendix B for

a discussion of sequence numbers.

2. Codification. Topic, Subtopic, Section, and paragraph.

Grandfathered content excluded from the Codification as of July 1,

2009 General

The authoritative release of the Codification as of July 1, 2009 excludes grandfathered material.

Users need to access the relevant standards for such grandfathered items. See the items below and Codification Section 105-10-70 for a discussion of grandfathered material.

October 2, 2009 (v 3.0)

© 2009 Financial Accounting Foundation 10 of 40

Business Combinations

Topic 805, Business Combinations, was created using only FASB Statement No. 141(R),

Business Combinations (revised), and related content. It excluded content from FASB Statement No. 141, Business Combinations, and related standards. To maintain a consistent presentation,

Topic 805 presents all content as pending content even though some content applies to business combinations before the effective date of Statement 141(R). See Codification paragraph 805-10- 65-1 for the effective date. Accordingly, for business combinations applicable before the effective date in Codification paragraph 805-10-65-1, users need to access Statement 141 and any other relevant standards.

Income Taxes

The FASB used December 31, 2008, as the target effective date for purposes of authoring the Codification. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, was originally effective for fiscal years beginning after December 31, 2006. As a result, the Codification included Interpretation 48 and its related amendments and excluded certain content that was superseded by Interpretation 48. After the original issuance of Interpretation 48, the FASB issued three FASB Staff Positions to defer the effective date for certain nonpublic entities.

The FASB issued FASB Staff Position No. FIN 48-3, Effective Date of FASB

Interpretation No. 48 for Certain Nonpublic Enterprises, that extends the effective date for fiscal years beginning after December 31, 2008. As a result, the Codification excludes content that was amended or superseded by FIN 48. Accordingly, nonpublic entities electing the deferral must access FASB Statement No. 109, Accounting for Income Taxes,and related standards that existed before the issuance of Interpretation 48. See Codification paragraph 740-10-65-1 for additional details.

Pensions

As indicated in Codification paragraph 715-20-65-1, during the Codification process, the FASB issued FASB Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,and FASB Staff Position No. FAS 158-1, Conforming Amendments to the Illustrations in FASB Statements No. 87, No. 88, and No. 106 and to the Related Staff Implementation Guides. Because those standards were effective beginning in 2006, the amended content was integrated into the Codification. However, the transition period had various phases such that different aspects were effective at different times. As a result of the extended effective date, Topic 715 (Compensation—Retirement Benefits) excludes pre-Statement 158 literature that may be applicable to certain entities.

Transition guidance for first-time adopters of US GAAP

The Codification eliminates transition guidance for all guidance that is fully effective as of December 31, 2008. However, entities that need to apply US GAAP for the first time may need to access the original standards to determine the relevant transition guidance. This is especially true for cases when there are long transition periods.

October 2, 2009 (v 3.0)

© 2009 Financial Accounting Foundation 11 of 40

Non-GAAP

The FASB concluded that the Codification represents authoritative US GAAP. Therefore, the

Codification does not include guidance for non-GAAP matters such as:

1. Other Comprehensive Basis of Accounting (OCBOA)

2. Cash Basis

3. Income Tax Basis

4. Regulatory Accounting Principles (RAP).

Governmental accounting standards

The Codification does not include governmental accounting standards.

Audit guidance

The Codification eliminated references to audit guidance.

October 2, 2009 (v 3.0)

© 2009 Financial Accounting Foundation 12 of 40

Structure and Style Matters

Topical structure

Illustration of the hierarchy

The following figure provides the terminology and a visual representation using a partial hierarchy of the Leases Topic.

Topic

Subtopics

Sections

Subsections

Leases

Scope Disclosure Scope Disclosure Scope Disclosure

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