GAAP Guidebook Edition. Steven M. Bragg

Transcription

1 GAAP Guidebook 2018 Edition Steven M. Bragg

2 Chapter 1 Introduction... 1 Learning Objectives... 1 Introduction... 1 What is GAAP?... 1 How this Book is Organized... 3 How to Use this Book... 3 Accounting Principles... 4 Chapter Summary... 5 Review Questions... 6 Review Answers... 7 Chapter 2 Presentation of Financial Statements... 9 Learning Objectives... 9 Introduction... 9 Related Chapters... 9 Overview of the Presentation of Financial Statements... 9 Presentation Disclosures... 9 Liquidation Basis of Accounting Liquidation Basis Disclosures Going Concern Disclosures Discontinued Operations Discontinued Operations Disclosures Chapter Summary Review Questions Review Answers Chapter 3 Balance Sheet Learning Objectives Introduction Overview of the Balance Sheet The Common Size Balance Sheet The Comparative Balance Sheet How to Construct the Balance Sheet Offsetting Treatment of Negative Cash Balance Sheet Disclosures Chapter Summary Review Questions Review Answers Chapter 4 Comprehensive Income Learning Objectives Introduction Related Chapters Overview of Comprehensive Income Comprehensive Income Disclosures Chapter Summary Review Questions Review Answers Chapter 5 Income Statement Learning Objectives Introduction Related Chapters Overview of the Income Statement... 37

3 The Single-Step Income Statement The Multi-Step Income Statement The Condensed Income Statement The Contribution Margin Income Statement The Multi-Period Income Statement How to Construct the Income Statement Income Statement Disclosures Chapter Summary Review Questions Review Answers Chapter 6 Statement of Cash Flows Learning Objectives Introduction Overview of the Statement of Cash Flows The Direct Method The Indirect Method How to Prepare the Statement of Cash Flows Disclosures for the Statement of Cash Flows Chapter Summary Review Questions Review Answers Chapter 7 Notes to Financial Statements Learning Objectives Introduction Overview of Notes to Financial Statements Chapter Summary Review Questions Review Answers Chapter 8 Accounting Changes and Error Corrections Learning Objectives Introduction Related Chapters Changes in Accounting Principle Changes in Accounting Estimate Changes in Reporting Entity Correction of an Error in Previously Issued Financial Statements Corrections Related to Prior Interim Periods The Materiality of an Error Accounting Changes and Error Corrections Disclosures Change in Accounting Principle Change in Accounting Estimate Change in Reporting Entity Error Corrections Historical Summaries Chapter Summary Review Questions Review Answers Chapter 9 Changing Prices Learning Objectives Introduction Overview of Changing Prices Inventory and Fixed Assets Specialized Assets Recoverable Amounts ii

4 Income from Continuing Operations Restatement of Current Cost Information Translation Adjustments Purchasing Power Gains and Losses Restatement Steps Changing Prices Disclosures Five-Year Summary Other Current Year Disclosures Other Disclosures for Mineral Resources Assets Chapter Summary Review Questions Review Answers Chapter 10 Earnings per Share Learning Objectives Introduction Basic Earnings per Share Diluted Earnings per Share Treasury Stock and Reverse Treasury Stock Methods Treasury Stock Method Reverse Treasury Stock Method Disclosure of Earnings per Share Chapter Summary Review Questions Review Answers Chapter 11 Interim Reporting Learning Objectives Introduction Related Chapters Overview of Interim Reporting General Interim Reporting Rule Variations from the Interim Reporting Rule Changes in Accounting Principle in Interim Periods Changes in Accounting Estimate in Interim Periods Error Correction in Interim Periods Adjustments to Prior Interim Periods The Integral View The Discrete View Comparison of the Integral and Discrete Views Disclosures for Interim Reporting Chapter Summary Review Questions Review Answers Chapter 12 Risks and Uncertainties Learning Objectives Introduction Related Chapter Overview of Risks and Uncertainties Risks and Uncertainties Disclosures Chapter Summary Review Questions Review Answers Chapter 13 Segment Reporting Learning Objectives Introduction iii

5 Overview of Segment Reporting Segment Disclosure Segment Disclosure Products, Services, and Customer Disclosure Geographic Area Disclosure Chapter Summary Review Questions Review Answers Chapter 14 Receivables Learning Objectives Introduction Related Chapter Notes Receivable Acquisition, Development, and Construction Arrangements Nonrefundable Fees and Other Costs Loans and Debt Securities Acquired with Deteriorated Credit Quality Troubled Debt Restructurings by Creditors Classification of Government-Guaranteed Loans Receivables Presentation Receivables Disclosures Chapter Summary Review Questions Review Answers Chapter 15 Investments Debt and Equity Securities Learning Objectives Introduction Related Chapters Overview of Investments Debt and Equity Securities Accounting for Investments Impairment of Investments Equity Securities without Readily Determinable Fair Values Dividend and Interest Income Investment Disclosures Chapter Summary Review Questions Review Answers Chapter 16 Investments Equity Method and Joint Ventures Learning Objectives Introduction The Equity Method Partnerships, Joint Ventures, and Limited Liability Entities Investment Disclosures Chapter Summary Review Questions Review Answers Chapter 17 Inventory Learning Objectives Introduction Overview of Inventory The Periodic Inventory System The Perpetual Inventory System Inventory Costing The First In, First Out Method The Last In, First Out Method iv

6 The Weighted Average Method Standard Costing The Retail Inventory Method The Gross Profit Method Overhead Allocation The Lower of Cost or Market Rule Work in Process Accounting Accounting for Obsolete Inventory Consignment Accounting Goods in Transit Inventory Disclosures Chapter Summary Review Questions Review Answers Chapter 18 Other Assets and Deferred Costs Learning Objectives Introduction Related Chapters Overview of Other Assets and Deferred Costs Prepaid Expenses Preproduction Costs for Long-Term Supply Arrangements Capitalized Advertising Costs Insurance Contracts that Do Not Transfer Insurance Risk Other Assets and Deferred Costs Disclosures Preproduction Costs for Long-Term Supply Arrangements Capitalized Advertising Costs Insurance Contracts that Do Not Transfer Insurance Risk Chapter Summary Review Questions Review Answers Chapter 19 Intangibles Goodwill and Other Learning Objectives Introduction Related Chapters Goodwill Goodwill Amortization General Intangibles Other than Goodwill Internal-Use Software Website Development Costs Intangibles Disclosures Chapter Summary Review Questions Review Answers Chapter 20 Property, Plant, and Equipment Learning Objectives Introduction Related Chapters Overview of Fixed Assets Initial Fixed Asset Recognition Fixed Assets Acquired through a Business Combination Nonmonetary Exchanges Depreciation and Amortization Straight-Line Method Sum-of-the-Years Digits Method v

7 Double-Declining Balance Method Depletion Method Units of Production Method Land Depreciation Land Improvement Depreciation Depreciation Accounting Entries Fixed Asset Impairment Fixed Asset Disposal Assets Held for Sale Abandoned Assets Idle Assets Fixed Asset Disposal Accounting Fixed Asset Disclosures General Fixed Asset Disclosures Change in Estimate Disclosures Intangible Asset Impairment Disclosures Intangible Asset Disclosures Not-for-Profit Fixed Asset Accounting Initial Recognition of Fixed Assets Restrictions on Contributed Assets Valuation of Contributed Assets Valuation of Contributed Services Valuation of Art, Historical Treasures, and Similar Items Depreciation of Fixed Assets Chapter Summary Review Questions Review Answers Chapter 21 Liabilities Learning Objectives Introduction Related Chapters Extinguishments of Liabilities Joint and Several Liability Arrangements Insurance-Related Assessments Prepaid Stored-Value Products Liabilities Disclosures Chapter Summary Review Questions Review Answers Chapter 22 Asset Retirement and Environmental Obligations Learning Objectives Introduction Overview of Asset Retirement Obligations The Initial Measurement of an Asset Retirement Obligation Subsequent Measurement of an Asset Retirement Obligation Settlement of an Asset Retirement Obligation Overview of Environmental Obligations Measurement of Environmental Obligations Recoveries Related to Environmental Obligations Asset Retirement and Environmental Obligations Disclosures Asset Retirement Obligations Environmental Obligations Chapter Summary Review Questions Review Answers vi

8 Chapter 23 Exit or Disposal Cost Obligations Learning Objectives Introduction Overview of Exit or Disposal Cost Obligations Exit or Disposal Cost Obligation Disclosures Chapter Summary Review Questions Review Answers Chapter 24 Commitments Learning Objectives Introduction Overview of Commitments Chapter Summary Review Questions Review Answers Chapter 25 Contingencies Learning Objectives Introduction Loss Contingencies Gain Contingencies Contingency Disclosures Chapter Summary Review Questions Review Answers Chapter 26 Guarantees Learning Objectives Introduction Overview of Guarantees Guarantee Disclosures Chapter Summary Review Questions Review Answers Chapter 27 Debt Learning Objectives Introduction Related Chapter General Debt Topics Sales of Future Revenues Increasing Rate Debt Debt with Conversion and Other Options Debt Instruments with Detachable Warrants Convertible Securities Beneficial Conversion Features Interest Forfeiture Induced Conversions Conversion by Exercise of Call Option Convertible Instruments Issued to Nonemployees as Payment Contingent Conversion Option Own-Share Lending Arrangements Participating Mortgage Loans Product Financing Arrangements Debt Modifications and Extinguishments Troubled Debt Restructurings by Debtors Debt Presentation vii

9 Callable Debt Classification of Debt that Includes Covenants Debt Issuance Costs Due on Demand Loans Increasing-Rate Debt Revolving Debt Agreements Short-Term Obligations to be Refinanced Subjective Acceleration Clauses Participating Mortgage Loans Troubled Debt Restructurings by Debtors Debt Disclosures Long-Term Obligations Short-Term Obligations to be Refinanced Own-Share Lending Arrangements Participating Mortgage Loans Other Debt Disclosures Troubled Debt Restructurings by Debtors Chapter Summary Review Questions Review Answers Chapter 28 Equity Learning Objectives Introduction Related Chapters Overview of Equity The Sale of Stock Dividend Payments Stock Dividends and Stock Splits Stock Dividend Stock Split Treasury Stock Purchase of Treasury Stock Resale of Treasury Stock Cost Method Constructive Retirement Method Equity-Based Payments to Nonemployees Initial Recognition Spinoffs and Reverse Spinoffs Equity Disclosures Rights and Privileges Preferred Stock Contingently Convertible Securities Redeemable Securities Treasury Stock Changes in Shareholders Equity Equity-Based Payments to Nonemployees Spinoffs and Reverse Spinoffs Chapter Summary Review Questions Review Answers Chapter 29 Revenue Recognition Learning Objectives Introduction The Nature of a Customer Steps in Revenue Recognition viii

10 Step One: Link Contract to Customer Step Two: Note Performance Obligations Step Three: Determine Prices Variable Consideration Possibility of Reversal Sales Taxes Time Value of Money Noncash Consideration Payments to Customers Refund Liabilities Step Four: Allocate Prices to Obligations Allocation of Price Discounts Allocation of Variable Consideration Subsequent Price Changes Step Five: Recognize Revenue Measurement of Progress Completion Output Methods Input Methods Change in Estimate Progress Measurement Right of Return Consistency Contract Modifications Treatment as Separate Contract Treatment as Continuing Contract Entitlement to Payment Bill-and-Hold Arrangements Consideration Received from a Supplier Customer Acceptance Customer Options for Additional Purchases Licensing Nonrefundable Upfront Fees Principal versus Agent Repurchase Agreements Unexercised Rights of Customers Warranties Contract-Related Costs Costs to Obtain a Contract Costs to Fulfill a Contract Amortization of Costs Impairment of Costs Exclusions Revenue Disclosures Chapter Summary Review Questions Review Answers Chapter 30 Compensation General Learning Objectives Introduction Related Chapters Overview of Compensation Compensated Absences Deferred Compensation Arrangements Lump-Sum Payments under Union Contracts Compensation Disclosures Chapter Summary ix

11 Review Questions Review Answers Chapter 31 Compensation Retirement Benefits Learning Objectives Introduction Related Chapters Overview of Retirement Benefits Defined Benefit Plans Expense Attribution for Delayed Vesting Discount Rates Settlements and Curtailments Termination Benefits Combined Pension Plans Defined Contribution Plans Presentation of Retirement Benefit Information Retirement Benefit Disclosures Defined Benefit Plan Disclosures for Public Companies Defined Benefit Plan Disclosures for Private Companies Disclosures for Defined Benefit Plans in Interim Periods Disclosures for Defined Contribution Plans Chapter Summary Review Questions Review Answers Chapter 32 Compensation Stock Compensation Learning Objectives Introduction Related Chapters Overview of Stock Compensation The Volatility Concept Fair Value Calculation Alternatives Awards Classified as Equity Award Measurement Problems Contingent Features Award Modifications Income Tax Effects Awards Classified as Liabilities Employee Share Purchase Plans Stock-Based Compensation Disclosures Chapter Summary Review Questions Review Answers Chapter 33 Other Expenses Learning Objectives Introduction Related Chapter Startup Costs Insurance Costs Retroactive Contracts Claims-Made Contracts Multiple-Year Retrospectively Rated Contracts Contributions Made Real and Personal Property Taxes Advertising Costs Electronic Equipment Waste Obligations x

12 Business and Technology Reengineering Other Expenses Disclosures Insurance Cost Disclosures Real and Personal Property Tax Disclosures Advertising Cost Disclosures Chapter Summary Review Questions Review Answers Chapter 34 Research and Development Learning Objectives Introduction Related Chapters Overview of Research and Development Research and Development Disclosures Chapter Summary Review Questions Review Answers Chapter 35 Income Taxes Learning Objectives Introduction Related Chapters Overview of Income Taxes Accounting for Income Taxes Tax Positions Deferred Tax Expense Applicable Tax Rate Interest and Penalties Intraperiod Tax Allocation Taxes Related to Undistributed Earnings Interim Reporting Income Taxes Presentation Income Taxes Disclosure Balance Sheet Income Statement Other Chapter Summary Review Questions Review Answers Chapter 36 Business Combinations Learning Objectives Introduction Related Chapters Overview of Business Combinations Identifiable Assets and Liabilities, and Noncontrolling Interests Goodwill or Gain from Bargain Purchase Goodwill Calculation Bargain Purchase Reverse Acquisitions Related Issues Acquisition of Assets Transactions between Entities under Control of Same Parent Pushdown Accounting Income Taxes Business Combination Disclosures xi

13 General Disclosures Identifiable Assets and Liabilities, and any Noncontrolling Interest Goodwill or Gain from Bargain Purchase Reverse Acquisitions Transactions between Entities under Control of Same Parent Income Taxes Chapter Summary Review Questions Review Answers Chapter 37 Financial Statement Consolidation Learning Objectives Introduction Related Chapter Overview of Consolidations Recognition of a Consolidation Consolidation Examples Recognition of Noncontrolling Interest Sale of Shares by Subsidiary Share of Accumulated Other Comprehensive Income Full Consolidation Example Consolidation of Variable Interest Entities Initial Consolidation Subsequent Consolidation Consolidation of Leasing Entities by Private Companies Consolidation of Contractually Controlled Entities Control of Partnerships Termination of a Consolidation Consolidation Presentation Consolidation Disclosures Chapter Summary Review Questions Review Answers Chapter 38 Derivatives and Hedging Learning Objectives Introduction Other Comprehensive Income Derivative Accounting Hedge Accounting General Hedge Accounting Fair Value Hedges Hedge Accounting Cash Flow Hedges Hedge Accounting Net Investment Hedges Embedded Derivatives Derivative and Hedging Disclosures General Disclosures Fair Value Hedge Disclosures Cash Flow Hedge Disclosures Chapter Summary Review Questions Review Answers Chapter 39 Fair Value Measurement Learning Objectives Introduction The Fair Value Concept Fair Value Differences from Actual Prices Paid xii

14 Fair Value Measurement Approaches The Net Asset Value Variation Fair Value Measurements for Liabilities Use of Multiple Measurements Fair Value Disclosures Chapter Summary Review Questions Review Answers Chapter 40 Financial Instruments Learning Objectives Introduction Related Chapters Off-Balance Sheet Credit Risk Fair Value Option Registration Payment Arrangements Financial Instruments Disclosures Fair Value of Financial Instruments Concentrations of Credit Risk of Financial Instruments Market Risk of Financial Instruments Fair Value Option Registration Payment Arrangements Separate Presentation of Financial Assets and Financial Liabilities Chapter Summary Review Questions Review Answers Chapter 41 Foreign Currency Matters Learning Objectives Introduction Related Chapters Foreign Currency Transactions Financial Statement Translation Determination of Functional Currency Translation of Financial Statements Use of Average Exchange Rates Hyperinflationary Effects Derecognition of a Foreign Entity Investment Foreign Currency Disclosures Chapter Summary Review Questions Review Answers Chapter 42 Interest Learning Objectives Introduction Overview of Capitalized Interest Assets on Which to Capitalize Interest Assets on Which Interest is Not Capitalized The Interest Capitalization Period The Capitalization Rate Calculating Interest Capitalization Overview of Imputed Interest Interest Disclosures Capitalized Interest Disclosures Imputed Interest Disclosures Chapter Summary xiii

15 Review Questions Review Answers Chapter 43 Leases Learning Objectives Introduction The Nature of a Lease Lease Components (Lessee) Lease Components (Lessor) Initial Direct Costs Lease Consideration The Lease Term Initial Measurement of Lease Payments Subsequent Measurement of Lease Payments Types of Leases Asset and Liability Recognition (Lessee) Initial Measurement Short-Term Leases Finance Leases Operating Leases Optional Lease Payments Right-of-Use Asset Impairment Leasehold Improvement Amortization Subleases Maintenance Deposits Derecognition Lease Recognition Topics (Lessor) Sales-Type Leases Direct Financing Leases Operating Leases Variable Lease Payments Lease Modifications Lessee Impact Lessor Impact Elections Discount Rate Separation of Non-Lease Components Sale and Leaseback Transactions Lease Presentation Lease Disclosures Lessee Disclosures Lessor Disclosures Sale and Leaseback Transactions Chapter Summary Review Questions Review Answers Chapter 44 Nonmonetary Transactions Learning Objectives Introduction Related Chapter Overview of Nonmonetary Transactions Purchases and Sales of Inventory with the Same Counterparty Barter Transactions Exchanges Involving Monetary Consideration Exchanges of a Nonfinancial Asset for a Noncontrolling Ownership Interest Nonmonetary Transaction Disclosures xiv

16 Chapter Summary Review Questions Review Answers Chapter 45 Related Party Disclosures Learning Objectives Introduction Overview of Related Parties Related Party Disclosures Chapter Summary Review Questions Review Answers Chapter 46 Subsequent Events Learning Objectives Introduction Overview of Subsequent Events Subsequent Event Disclosures Chapter Summary Review Questions Review Answers Glossary Index xv