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Wiley GAAP 2016

Interpretation and Application of Generally Accepted Accounting Principles

Joanne M. Flood

Wiley Logo


Wiley GAAP 2016: 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 for commercial entities in accordance with GAAP. For easy reference and research, the checklist follows the order of the codification.

The following FASB Accounting Standards Updates were issued through May 2015 and since the Wiley GAAP 2015. Their requirements are incorporated in this edition of Wiley GAAP, as and where appropriate and at a minimum in the Technical Alert section at the beginning of the Topic referenced in the ASU title. Note that information on ASU 2014-09 is included as an appendix to the chapter on ASC 605.

Significant accounting changes are on the horizon. In the next year, the FASB is expected to make strides on the following major projects and others:

Readers are encouraged to check the FASB website for status updates to the above and other FASB projects.

In response to the 2011 report of the Blue Ribbon Panel on Standard Setting for Private Companies, the AICPA and the FASB began separate initiatives. In July 2013, the AICPA released its Financial Reporting Framework for Small- and Medium-sized Entities. The AICPA has positioned the Framework as an alternative to U.S. GAAP and one that will provide consistent, reliable information for small- and medium-sized entities that are not required to prepare financial statements in accordance with U.S. GAAP. The FASB created the Private Company Council to address the Blue Ribbon Panel's report. The FASB issued a framework for the FASB and the PCC to use in determining whether alternatives to existing and proposed U.S. GAAP are warranted for private companies. In 2014, FASB issued three ASUs that are consensuses of the PCC. Those are listed on the table above.

The author's wish is that this book will serve preparers, practitioners, faculty, and students, as a reliable reference tool to facilitate their understanding of, and ability to apply, the complexities of the authoritative literature.

Joanne M. Flood

June 2015


About the Author

Joanne M. Flood, CPA, is an author and independent consultant on accounting and auditing technical topics and e-learning. She has experience as an auditor in both an international firm and a local firm and worked as a senior manager in the AICPA's Professional Development group. She received her MBA Summa Cum Laude in Accounting from Adelphi University and her Bachelor's degree in English from Molloy College.

While in public accounting, Joanne worked on major clients in retail, manufacturing, and finance and on small business clients in construction, manufacturing, and professional services. At the AICPA, Joanne developed and wrote e-learning, text, and instructor-led training courses on U.S. and International Standards. She also produced training materials in a wide variety of media, including print, video, and audio, and pioneered the AICPA's e-learning product line. Joanne resides on Long Island, New York with her daughter, Elizabeth. Joanne is the author of several articles for and contributor to Wiley Insight IFRS and the following Wiley publications:

  1. Financial Disclosure Checklist
  2. Wiley GAAP 2016: Interpretation and Application of Generally Accepted Accounting Principles
  3. Wiley Practitioner's Guide to GAAS 2015: Covering all SASs, SSAEs, SSARSs, and Interpretations
  4. Wiley GAAP: Financial Statement Disclosures Manual (Wiley Regulatory Reporting)
  5. Wiley Revenue Recognition

And the following AICPA online and live CPE programs:

  1. Audit Staff Essentials, Level 1 – New Hire
  2. Audit Staff Essentials, Level 2 – Experienced Staff
  3. Audit Staff Essentials, Level 3 – Audit Senior/In-Charge

Codification Taxonomy

Topic # and title Subtopic # and title
I. General Principles and Objectives
105 Generally Accepted Accounting Principles 105-10 Overall
II. Overall Financial Reporting, Presentation, and Display Matters
A. Overall Presentation of Financial Statements
205 Presentation of Financial Statements 205-10 Overall
205-20 Discontinued Operations
205-30 Liquidation Basis of Accounting
205-40 Going Concern
210 Balance Sheet 210-10 Overall
210-20 Offsetting
215 Statement of Shareholders' Equity 215-10 Overall
220 Comprehensive Income 220-10 Overall
225 Income Statement 225-10 Overall
225-20 Extraordinary and Unusual Items
225-30 Business Interruption Insurance
230 Statement of Cash Flows 230-10 Overall
235 Notes to Financial Statements 235-10 Overall
B. Various Financial Reporting, Presentation, and Display Matters
250 Accounting Changes and Error Corrections 250-10 Overall
255 Changing Prices 255-10 Overall
260 Earnings Per Share 260-10 Overall
270 Interim Reporting 270-10 Overall
270-40 Income Taxes
272 Limited Liability Entities 272-10 Overall
274 Personal Financial Statements 274-10 Overall
275 Risks and Uncertainties 275-10 Overall
280 Segment Reporting 280-10 Overall
III. Transaction-Related Topics
A. Financial Statement Accounts
305 Cash and Cash Equivalents 305-10 Overall
310 Receivables 310-10 Overall
310-20 Nonrefundable Fees and Other Costs
310-30 Loans and Debt Securities Acquired with Deteriorated Credit Quality
310-40 Troubled Debt Restructurings by Creditors
320 Investments—Debt and Equity Securities 320-10 Overall
323 Investments—Equity Method and Joint Ventures 323-10 Overall
323-30 Partnerships, Joint Ventures, and Limited Liability Entities
325 Investments—Other 325-10 Overall
325-20 Cost Method Investments
325-30 Investments in Insurance Contracts
325-40 Beneficial Interests in Securitized Financial Assets
330 Inventory 330-10 Overall
340 Other Assets and Deferred Costs 340-10 Overall
340-20 Capitalized Advertising Costs
340-30 Insurance Contracts that Do Not Transfer Insurance Risk
340-40 Contracts with Customers
350 Intangibles—Goodwill and Other 350-10 Overall
350-20 Goodwill
350-30 General Intangibles Other Than Goodwill
350-40 Internal-Use Software
350-50 Web Site Development Costs
360 Property, Plant, and Equipment 360-10 Overall
360-20 Real Estate Sales
405 Liabilities 405-10 Overall
405-20 Extinguishment of Liabilities
405-30 Insurance-Related Assessments
405-40 Obligations Resulting from Joint and Several Liabilities
410 Asset Retirement and Environmental Obligations 410-10 Overall
410-20 Asset Retirement Obligations
410-30 Environmental Obligations
420 Exit or Disposal Cost Obligations 420-10 Overall
430 Deferred Revenue 430-10 Overall
440 Commitments 440-10 Overall
450 Contingencies 450-10 Overall
450-20 Loss Contingencies
450-30 Gain Contingencies
460 Guarantees 460-10 Overall
470 Debt 470-10 Overall
470-20 Debt with Conversion and Other Options
470-30 Participating Mortgage Loans
470-40 Product Financing Arrangements
470-50 Modifications and Extinguishments
470-60 Troubled Debt Restructurings by Debtors
480 Distinguishing Liabilities from Equity 480-10 Overall
505 Equity 505-10 Overall
505-20 Stock Dividends and Stock Splits
505-30 Treasury Stock
505-50 Equity-Based Payments to Non-Employees
505-60 Spin-offs and Reverse Spin-offs
605 Revenue Recognition 605-10 Overall
605-15 Products
605-20 Services
605-25 Multiple-Element Arrangements
605-28 Milestone Method
605-30 Rights to Use
605-35 Construction-Type and Production-Type Contracts
605-40 Gains and Losses
605-45 Principal–Agent Considerations
605-50 Customer Payments and Incentives
606 Revenue from Contracts with Customers 606-10 Overall1
610 Other Income 610-10 Overall1
610-20 Gains and Losses from the Derecognition of Nonfinancial Assets
610-30 Gains and Losses on Involuntary Conversions
705 Cost of Sales and Services 705-10 Overall
705-20 Accounting for Consideration Received from a Vendor1
710 Compensation—General 710-10 Overall
712 Compensation—Nonretirement Postemployment Benefits 712-10 Overall
715 Compensation—Retirement Benefits 715-10 Overall
715-20 Defined Benefit Plans—General
715-30 Defined Benefit Plans—Pensions
715-60 Defined Benefit Plans—Other Postretirement
715-70 Defined Contribution Plans
715-80 Multiemployer Plans
718 Compensation—Stock Compensation 718-10 Overall
718-20 Awards Classified as Equity
718-30 Awards Classified as Liabilities
718-40 Employee Stock Ownership Plans
718-50 Employee Share Purchase Plans
718-740 Income Taxes
720 Other Expenses 720-10 Overall
720-15 Start-Up Costs
720-20 Insurance Costs
720-25 Contributions Made
720-30 Real and Personal Property Taxes
720-35 Advertising Costs
720-40 Electronic Equipment Waste Obligations
720-45 Business and Technology Reengineering
720-50 Fees Paid to the Federal Government by Pharmaceutical Manufacturers and Health Insurers
730 Research and Development 730-10 Overall
730-20 Research and Development Arrangements
740 Income Taxes 740-10 Overall
740-20 Intraperiod Tax Allocation
740-30 Other Considerations or Special Areas
B. Broad Transactional Categories
805 Business Combinations 805-10 Overall
805-20 Identifiable Assets and Liabilities, and Any Noncontrolling Interest
805-30 Goodwill or Gain from Bargain Purchase, Including Consideration Transferred
805-40 Reverse Acquisitions
805-50 Related Issues
805-740 Income Taxes
808 Collaborative Arrangements 808-10 Overall
810 Consolidation 810-10 Overall
810-20 Control of Partnerships and Similar Entities
810-30 Research and Development Arrangements
815 Derivatives and Hedging 815-10 Overall
815-15 Embedded Derivatives
815-20 Hedging—General
815-25 Fair Value Hedges
815-30 Cash Flow Hedges
815-35 Net Investment Hedges
815-40 Contracts in Entity's Own Equity
815-45 Weather Derivatives
820 Fair Value Measurements 820-10 Overall
825 Financial Instruments 825-10 Overall
825-20 Registration Payment Arrangements
830 Foreign Currency Matters 830-10 Overall
830-20 Foreign Currency Transactions
830-30 Translation of Financial Statements
830-230 Statement of Cash Flows
830-740 Income Taxes
835 Interest 835-10 Overall
835-20 Capitalization of Interest
835-30 Imputation of Interest
840 Leases 840-10 Overall
840-20 Operating Leases
840-30 Capital Leases
840-40 Sale-Leaseback Transactions
845 Nonmonetary Transactions 845-10 Overall
850 Related-Party Disclosures 850-10 Overall
852 Reorganizations 852-10 Overall
852-20 Quasi-Reorganizations
852-740 Income Taxes
853 Service Concession Arrangements 853-10 Overall
855 Subsequent Events 855-10 Overall
860 Transfers and Servicing 860-10 Overall
860-20 Sales of Financial Assets
860-30 Secured Borrowings and Collateral
860-40 Transfers to Qualifying Special-Purpose Entities
860-50 Servicing Assets and Liabilities
IV. Industry/Unique Topics
905 Agriculture 905-10 Overall
908 Airlines 908-10 Overall
910 Contractors—Construction 910-10 Overall
910-20 Contract Costs
912 Contractors—Federal Government 912-10 Overall
912-20 Contract Costs
915 Development Stage Entities 915-10 Overall
920 Entertainment—Broadcasters 920-10 Overall
922 Entertainment—Cable Television 922-10 Overall
924 Entertainment—Casinos 924-10 Overall
926 Entertainment—Films 926-10 Overall
926-20 Other Assets—Film Costs
928 Entertainment—Music 928-10 Overall
930 Extractive Activities—Mining 930-10 Overall
932 Extractive Activities—Oil and Gas 932-10 Overall
940 Financial Services—Brokers and Dealers 940-10 Overall
940-20 Broker Dealer Activities
942 Financial Services—Depository and Lending 942-10 Overall
944 Financial Services—Insurance 944-10 Overall
944-20 Insurance Activities
944-30 Acquisition Costs
944-40 Claim Costs and Liabilities for Future Policy Benefits
944-50 Policyholder Dividends
944-60 Premium Deficiency and Loss Recognition
944-80 Separate Accounts
946 Financial Services—Investment Companies 946-10 Overall
946-20 Investment Company Activities
948 Financial Services—Mortgage Banking 948-10 Overall
950 Financial Services—Title Plant
952 Franchisors 952-10 Overall
954 Health Care Entities 954-10 Overall
958 Not-for-Profit Entities 958-10 Overall
958-20 Financially Interrelated Entities
958-30 Split-Interest Arrangements
960 Plan Accounting—Defined Benefit Pension Plans 960-10 Overall
960-20 Accumulated Plan Benefits
960-30 Net Assets Available for Plan Benefits
960-40 Terminating Plans
962 Plan Accounting—Defined Contribution Pension Plans 962-10 Overall
962-40 Terminating Plans
965 Plan Accounting—Health and Welfare Benefit Plans 965-10 Overall
965-20 Net Assets Available for Plan Benefits
965-30 Plan Benefits Obligations
965-40 Terminating Plans
970 Real Estate—General 970-10 Overall
972 Real Estate—Common Interest Realty Associations 972-10 Overall
974 Real Estate—Real Estate Investment Trusts 974-10 Overall
976 Real Estate—Retail Land 976-10 Overall
978 Real Estate—Time-Sharing Activities 978-10 Overall
980 Regulated Operations 980-10 Overall
980-20 Discontinuation of Rate-Regulated Accounting
985 Software 985-10 Overall
985-20 Costs of Software to Be Sold, Leased, or Marketed
995 U.S. Steamship Entities
V. Glossary