Question

Access the FASB Accounting Standards Codification at the FASB website (asc.fasb.org). Determine the specific citation for each of the following items:
1. The calculation of the weighted average number of shares for basic earnings per share purposes.
2. The alternative formats permissible for reporting comprehensive income.
3. The classifications of cash flows required in the statement of cash flows.

 

Answer 1

The FASB Accounting Standards Codification→ represents the single source of authoritative U.S. generally accepted accounting principles. The specific citation for each of the following items is:

 

1. The calculation of the weighted average number of shares for basic earnings per share purposes:

 

FASB ASC 260-10-55-2: "Earnings per Share-Overall-Implementation Guidance and Illustration-Computing a Weighted Average."

The weighted-average number of shares is an arithmetical mean average of shares outstanding and assumed to be outstanding for EPS computations. The most precise average would be the sum of the shares determined on a daily basis divided by the number of days in the period. Less-precise averaging methods may be used, however, as long as they produce reasonable results. Methods that introduce artificial weighting, such as the Rule of 78 method, are not acceptable for computing a weighted-average number of shares for EPS computations.

 

2. The alternative formats permissible for reporting comprehensive income:

 

FASB ASC 220-10-45-1: "Comprehensive Income-Overall-Other Presentation Items-Reporting Comprehensive Income."

 

1A. An entity reporting comprehensive income in a single continuous financial statement shall present its components in two sections, net income and other comprehensive income. If applicable, an entity shall present the following in that financial statement:

a. A total amount for net income together with the components that make up net income.

b. A total amount for other comprehensive income together with the components that make up other comprehensive income. As indicated in paragraph 220-10-15-3, an entity that has no items of other comprehensive income in any period presented is not required to report comprehensive income.

c. Total comprehensive income.

 

1B. An entity reporting comprehensive income in two separate but consecutive statements shall present the following:

a. Components of and the total for net income in the statement of net income

b. Components of and the total for other comprehensive income as well as a total for comprehensive income in the statement of other comprehensive income, which shall be presented immediately after the statement of net income. A reporting entity may begin the second statement with net income.

 

1C. An entity shall present, either in a single continuous statement of comprehensive income or in a statement of net income and statement of other comprehensive income, all items that meet the definition of comprehensive income for the period in which those items are recognized. Components included in other comprehensive income shall be classified based on their nature.

 

3. The classifications of cash flows required in the statement of cash flows:

FASB ASC 230-10-45-1: "Statement of Cash Flows-Overall-Other Presentation Matters-Form and Content."

 

A statement of cash flows shall report the cash effects during a period of an entity's operations, its investing transactions, and its financing transactions.

A statement of cash flows shall report the cash effects during a period of an entity's operations, its investing transactions, and its financing transactions.