Question
Hey from Austin, TX! Need a little help.
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The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles.
Required:
1.
1.Obtain the relevant authoritative literature on the disclosure of accounting policies using the FASB's Codification Research System at the FASB website (www.fasb.org)
2. What is the specific citation that describes the disclosure requirements that must be made by publicly traded companies for a LIFO liquidation?
3. Describe the disclosure requirements.
Explanation / Answer
1.FASB's Codification: Financial statement preparers sometimes are not sure whether they have the right GAAP, determining what is authoritative and what is not becomes difficult. In response to these concerns, the FASB developed the Financial Accounting standards Board Accounting Standards Codificatio. The FASB's primary goal in developing the codification is to provide in one place all the authoritative literature related to a particular topic. This will simply user access to all authoritative U.S. generallly accepted accounting principles. The codification changes the way GAAP is documented, presented, and updated. It explains what GAAP is and eliminates nonessential information such as redundant document summaries, basis for conclusions sections, and historical content. In short, the Codification is a major restructuring of accounting and reporting standards. Its purpose is to integrate and synthesize existing GAAP. 2.Unfortunately, LIFO lliquidations can occur frequently when using a specific-goods LIFO approach.To alleviate the LIFO liquidation problems and to simplify the accounting , companies can combine goods into pools. A pool groups items of a similar nature. Thus, instead of only identical units, a company comibines, and counts as a group, a number of similar units or products. This method, the specific - goods pooled LIFO approach, usually results in fewer LIFO liquidations. The specific-goods pooled LIFO approach eliminates some of the disadvantages of the specific-goods accounting for LIFO inventories. 3.When a company has a change in estimate effeced by a change in accounting principle, it must indicate why the new method is preferable.In addition, companies are subject to all other disclosure guidelines established for changes in accounting principle.