Fasb Codification System Orientation Paper
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The FASB Codification System was created in 2009 to be “the official source of authoritative nongovernmental U.S. generally accepted accounting principles” (FASB, 2009.). The system reorganized the U.S. GAAP pronouncements issued by the FASB and other standard-setting bodies into about 90 accounting topics and includes relevant SEC guidance in separate sections.
The purpose of the FASB Codification System is to organize the laws and accounting principles for simplicity. The codification is used by accounting professionals, analysts, reporting professional, investors, and other outside users to research topics needed for information. The codification system was created to make the research simple for the users with all up-to-date information, guidelines, and pronouncements. The users can browse by topic, search for topic, and use the Go To navigation to find the information intended (FASB Codification System, 2009).
The nine content areas located on the FASB Codification System are:
General Principles
Presentation
Assets
Liabilities
Equity
Revenue
Expenses
Broad Transactions
Industry
The general principles cover the Generally Accepted Accounting Principles which identifies the changes to the accounting standards updates. Each subtopic covers the updates to the GAAP guidelines, modifications done to the guidelines, content grandfathered in after the creation of the Codification system.
Each subtopic of the presentation section covers a presentation of financial statements, balance sheet, statement of shareholders equity, comprehensive income, income statement, statement of cash flows, notes to the financial statements, accounting changes and error corrections, changing prices, earnings per share, interim reporting, limited liability entities, personal financial statements, risks and uncertainties, and segment reporting.
The assets section covers the information that appears on the balance sheet, such as the cash and cash equivalents, receivables, investments- debt and equity securities, investments- equity method and joint ventures, investments- other, other assets and deferred costs, intangibles- goodwill and other, and property, plant, and equipment.
The subtopics of the liabilities section cover all the accounts in the liabilities section on the balance sheet. The subtopics are the liabilities, asset retirement and environmental obligations, exit or disposal cost obligations, deferred revenue, commitments, contingencies, guarantees, debt, and distinguishing liabilities from equity.
The equity subtopics cover the stock dividends and stock splits, treasury stock, equity-based