In: Accounting
In 250 words please explain FASB Codification 105-10-65-5; Generally Accepted Accounting Principles, Overall, Transition and Open Effective Date Information.
General Note
The Overview and Background Section provides overview and background material for the guidance contained in the Subtopic. It does not provide the historical background or due process. It may contain certain material that users generally consider useful to understand the typical situations addressed by the standards. The Section does not summarize the accounting and reporting requirements.
General
105-10-05-1 This Topic establishes the
Financial Accounting Standards Board (FASB) Accounting Standards
Codification® (Codification) as the source of authoritative
generally accepted accounting principles (GAAP) recognized by the
FASB to be applied by nongovernmental entities. Rules and
interpretive releases of the Securities and Exchange Commission
(SEC) under authority of federal securities laws are also sources
of authoritative GAAP for SEC registrants. In addition to the SEC’s
rules and interpretive releases, the SEC staff issues Staff
Accounting Bulletins that represent practices followed by the staff
in administering SEC disclosure requirements, and it utilizes SEC
Staff Announcements and Observer comments made at Emerging Issues
Task Force meetings to publicly announce its views on certain
accounting issues for SEC registrants.
105-10-05-2 If the guidance for a transaction or
event is not specified within a source of authoritative GAAP for
that entity, an entity shall first consider accounting principles
for similar transactions or events within a source of authoritative
GAAP for that entity and then consider nonauthoritative guidance
from other sources. An entity shall not follow the accounting
treatment specified in accounting guidance for similar transactions
or events in cases in which those accounting principles either
prohibit the application of the accounting treatment to the
particular transaction or event or indicate that the accounting
treatment should not be applied by analogy.
105-10-05-3 Accounting and financial reporting
practices not included in the Codification are nonauthoritative.
Sources of nonauthoritative accounting guidance and literature
include, for example, the following:
a. Practices that are widely recognized and prevalent either
generally or in the industry
b. FASB Concepts Statements
c. American Institute of Certified Public Accountants (AICPA)
Issues Papers
d. International Financial Reporting Standards of the International
Accounting Standards Board
e. Pronouncements of professional associations or regulatory
agencies
f. Technical Information Service Inquiries and Replies included in
AICPA Technical Practice Aids
g. Accounting textbooks, handbooks, and articles.
The appropriateness of other sources of accounting guidance depends on its relevance to particular circumstances, the specificity of the guidance, the general recognition of the issuer or author as an authority, and the extent of its use in practice.
105-10-05-4 The Codification contains the authoritative standards that are applicable to both public nongovernmental entities and nonpublic nongovernmental entities. Content contained in the SEC Sections (designated by an “S” preceding the Section number) is provided for convenience and relates only to SEC registrants. The SEC Sections do not contain the entire population of SEC rules, regulations, interpretive releases, and staff guidance. Content in the SEC Sections is expected to change over time, and there may be delays between SEC and staff changes to guidance and Accounting Standards Updates. The Codification does not replace or affect guidance issued by the SEC or its staff for public entities in their filings with the SEC.
105-10-05-5 The FASB does not consider Accounting Standards Updates as authoritative in their own right. Instead, new Accounting Standards Updates serve only to update the Codification, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the Codification. All nongrandfathered non-SEC accounting guidance not included in the Codification is superseded and deemed nonauthoritative.
105-10-05-6 The provisions of the Codification need not be applied to immaterial items.
105-10-10 Objectives
General Note
The Objectives Section provides the high-level objectives that the Subtopic is intended to accomplish or attain. The Section does not summarize or discuss the main principles of accounting and reporting requirements.
General
105-10-10-1 The
objective of this Topic is to establish the Financial Accounting
Standards Board (FASB) Accounting Standards Codification® as the
source of authoritative principles and standards recognized by the
FASB to be applied by nongovernmental entities in the preparation
of financial statements in conformity with generally accepted
accounting principles (GAAP). Rules and interpretive releases of
the Securities and Exchange Commission (SEC) under authority of
federal securities laws are also sources of authoritative GAAP for
SEC registrants.
105-10-10-2 This Topic also identifies the sources of accounting
principles and the framework for selecting the principles used in
the preparation of financial statements of nongovernmental entities
that are presented in conformity with GAAP in the United States
(the GAAP hierarchy).
15 Scope (ASC 105-15)
General Note
The Scope and Scope Exceptions Section outlines the items (for example, the entities, transactions, instruments, or events) to which the guidance in the Subtopic does or does not apply. In some cases, the Section may contain definitional or other text to frame the scope.
General
> Entities
105-10-15-1 The
Financial Accounting Standards Board (FASB) Accounting Standards
Codification® applies to financial statements of nongovernmental
entities that are presented in conformity with generally accepted
accounting principles (GAAP).FAS 168, paragraph B3]
105-10-15-2 [Content in the Securities and Exchange Commission
(SEC) Sections of the Codification is provided for convenience and
relates only to financial statements of SEC registrants that are
presented in conformity with GAAP.FAS 168, paragraph B3]
105-10-20 Glossary
General Note
The Master Glossary contains all terms identified as glossary terms
throughout the Codification. Clicking on any term in the Master
Glossary will display where the term is used. The Master Glossary
may contain identical terms with different definitions, some of
which may not be appropriate for a particular Subtopic. For any
particular Subtopic, users should only use the glossary terms
included in the particular Subtopic Glossary Section (Section
20).
Conduit Debt Securities
[ Certain limited-obligation revenue bonds, certificates of
participation, or similar debt instruments issued by a state or
local governmental entity for the express purpose of providing
financing for a specific third party (the conduit bond obligor)
that is not a part of the state or local government’s financial
reporting entity. FAS 126, paragraph 3 ] [ Although conduit debt
securities bear the name of the governmental entity that issues
them, the governmental entity often has no obligation for such debt
beyond the resources provided by a lease or loan agreement with the
third party on whose behalf the securities are issued. FAS 126,
paragraph 3] [ Further, the conduit bond obligor is responsible for
any future financial reporting requirements. FAS 126, paragraph
3]
Financial Statements Are Available to Be Issued
[ Financial statements are considered available to be issued when
they are complete in a form and format that complies with GAAP and
all approvals necessary for issuance have been obtained, for
example, from management, the board of directors, and/or
significant shareholders. The process involved in creating and
distributing the financial statements will vary depending on an
entity’s management and corporate governance structure as well as
statutory and regulatory requirements.FAS 165, paragraph 6]
Nongovernmental Entity
[ An entity that is not required to issue financial reports in
accordance with guidance promulgated by the Governmental Accounting
Standards Board or the Federal Accounting Standards Advisory
Board.FAS 168, paragraph B3]
Nonpublic Entity
[ Any entity that does not meet any of the following conditions:FAS
168, paragraph B3] a.[Its debt or equity securities trade in a
public market either on a stock exchange (domestic or foreign) or
in an over-the-counter market, including securities quoted only
locally or regionally. FAS 168, paragraph B3]
b.[It is a conduit bond obligor for conduit debt securities that
are traded in a public market (a domestic or foreign stock exchange
or an over-the-counter market, including local or regional
markets).FAS 168, paragraph B3]
c.[It files with a regulatory agency in preparation for the sale of
any class of debt or equity securities in a public market. FAS 168,
paragraph B3]
d.[It is required to file or furnish financial statements with the
Securities and Exchange Commission.FAS 168, paragraph B3]
e.[It is controlled by an entity covered by criteria (a) through
(d). FAS 168, paragraph B3]
Not-for-Profit Entity
[ An entity that possesses the following characteristics, FAS 116,
paragraph 209 ] [ in varying degrees, FAS 116, paragraph 209] [
that distinguish it from a business entity: FAS 116, paragraph 209
] a.[Contributions of significant amounts of resources from
resource providers who do not expect commensurate or proportionate
pecuniary return FAS 116, paragraph 209]
b.[Operating purposes other than to provide goods or services at a
profit FAS 116, paragraph 209]
c.[Absence of ownership interests like those of business entities.
FAS 116, paragraph 209]
[ Entities that clearly fall outside this definition include the
following: FAS 116, paragraph 209 ] a.[All investor-owned
entitiesFAS 116, paragraph 209]
b.[Entities that provide dividends, lower costs, or other economic
benefits directly and proportionately to their owners, members, or
participants, such as mutual insurance entities, credit unions,
farm and rural electric cooperatives, and employee benefit
plans.FAS 116, paragraph 209]
Public Business Entity
[ A public business entity is a business entity meeting any one of
the criteria below. Neither a not-for-profit entity nor an employee
benefit plan is a business entity. ASU 2013-12, paragraph 2] a.[It
is required by the U.S. Securities and Exchange Commission (SEC) to
file or furnish financial statements, or does file or furnish
financial statements (including voluntary filers), with the SEC
(including other entities whose financial statements or financial
information are required to be or are included in a filing). ASU
2013-12, paragraph 2]
b.[It is required by the Securities Exchange Act of 1934 (the Act),
as amended, or rules or regulations promulgated under the Act, to
file or furnish financial statements with a regulatory agency other
than the SEC. ASU 2013-12, paragraph 2]
c.[It is required to file or furnish financial statements with a
foreign or domestic regulatory agency in preparation for the sale
of or for purposes of issuing securities that are not subject to
contractual restrictions on transfer. ASU 2013-12, paragraph
2]
d.[It has issued, or is a conduit bond obligor for, securities that
are traded, listed, or quoted on an exchange or an over-the-counter
market. ASU 2013-12, paragraph 2]
e.[It has one or more securities that are not subject to
contractual restrictions on transfer, and it is required by law,
contract, or regulation to prepare U.S. GAAP financial statements
(including footnotes) and make them publicly available on a
periodic basis (for example, interim or annual periods). An entity
must meet both of these conditions to meet this criterion. ASU
2013-12, paragraph 2]
[ An entity may meet the definition of a public business entity
solely because its financial statements or financial information is
included in another entity’s filing with the SEC. In that case, the
entity is only a public business entity for purposes of financial
statements that are filed or furnished with the SEC. ASU 2013-12,
paragraph 2 ]
105-10-65 Transition
General Note
The Transition Section contains a description of the required
transition provisions and a list of the related paragraphs that
have been modified. This Section will retain the transition content
during the transition period. After the transition period, the
transition content will be removed yet will be available in
archived versions of the Section.
General
105-10-65-1 Paragraph superseded on 11/07/2012 after the end of the
transition period stated in FASB Statement No. 168, The FASB
Accounting Standards Codification®and the Hierarchy of Generally
Accepted Accounting Principles.
105-10-65-2 Paragraph superseded on 06/26/2015 after the end of the
transition period stated in Accounting Standards Update No.
2012-04, Technical Corrections and Improvements.
> Transition Related to Accounting Standards Update No. 2015-10,
Technical Corrections and Improvements
105-10-65-3 Accounting Standards Update
2015-102015-12-162015-12-162015-12-162015-12-162015-12-162015-12-162015-12-162015-12-162015-12-162015-12-162015-12-162015-12-16[The
following represents the transition and effective date information
related to Accounting Standards Update No. 2015-10, Technical
Corrections and Improvements:ASU 2015-10, paragraph 5]a. [ The
pending content that links to this paragraph shall be effective for
fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2015. ASU 2015-10, paragraph 5 ]
b. [ An entity shall recognize and present separately the
cumulative effect of the change in accounting principle of the
pending content that links to this paragraph as an adjustment to
the opening balance of retained earnings (or other appropriate
components of equity or net assets in the statement of financial
position) for the period of adoption. The cumulative-effect
adjustment is the difference between the amounts recognized in the
statement of financial position before initial application of the
pending content that links to this paragraph and the amounts
recognized in the statement of financial position at initial
application of the pending content that links to this paragraph.
ASU 2015-10, paragraph 5 ]
c. [ An entity may elect to apply the pending content that links to
this paragraph retrospectively. ASU 2015-10, paragraph 5 ]
d. [ Early application for the pending content that links to this
paragraph is permitted for any fiscal year or interim period for
which the entity’s financial statements have not yet been issued
(public business entities) or for which financial statements are
available to be issued (all other entities). ASU 2015-10, paragraph
5]
e. [ An entity shall disclose the nature of the change and the
reason for the change of the pending content that links to this
paragraph. ASU 2015-10, paragraph 5]
105-10-70 Grandfathered Material
General Note
The Grandfathered Guidance Section may contain descriptions,
references, and transition periods for content grandfathered after
July 1, 2009, by an Accounting Standards Update. See Codification
Section 105-10-70 and the grandfathered content section of the
Notice to Constituents for more information about grandfathered
materials.
General
105-10-70-1 Financial Accounting Standards Board (FASB) Statement
No. 162, The Hierarchy of Generally Accepted Accounting Principles,
contained a description of the categories of the generally accepted
accounting principles (GAAP) hierarchy that existed before the
Codification. An entity that has followed, and continues to follow,
an accounting treatment that was previously in category (c) or
category (d) of that GAAP hierarchy as of March 15, 1992, need not
change to an accounting treatment in a higher category ((b) or (c))
of that hierarchy if its effective date was before March 15, 1992.
For example, a nongovernmental entity that followed a prevalent
industry practice (category (d)) as of March 15, 1992, does not
have to change to an accounting treatment included in a standard in
category (b) or category (c) (such as an accounting principle in a
cleared American Institute of Certified Public Accountants [AICPA]
Statement of Position or Accounting Standards Executive Committee
Practice Bulletin) whose effective date is before March 15, 1992.
For standards whose effective date is after March 15, 1992, and for
entities initially applying an accounting principle after March 15,
1992 (except for Emerging Issues Task Force consensus positions
issued before March 16, 1992, which become effective in the
hierarchy for initial application of an accounting principle after
March 15, 1993), an entity shall follow guidance in the
Codification.
105-10-70-2 Certain accounting standards have allowed for the
continued application of superseded accounting standards for
transactions that have an ongoing effect in an entity’s financial
statements. That superseded guidance has not been included in the
Codification, shall be considered grandfathered, and shall continue
to remain authoritative for those transactions after the effective
date of FASB Statement No. 168, The FASB Accounting Standards
Codification®and the Hierarchy of Generally Accepted Accounting
Principles. While not comprehensive, the following are examples of
such grandfathered items:FAS 168, paragraph B3]a. [ Pooling of
interests in a business combination (originally addressed by APB
Opinion No. 16, Business Combinations) described in paragraph B217
of FASB Statement No. 141, Business Combinations
b. Pension transition assets or obligations described in paragraph
77 of FASB Statement No. 87, Employers’ Accounting for
Pensions
c. Employee stock ownership plan shares (originally addressed by
AICPA Statement of Position 76-3, Accounting Practices for Certain
Employee Stock Ownership Plans) purchased by, and held as of,
December 31, 1992, as described in paragraphs 97 and 102 of AICPA
Statement of Position 93-6, Employers’ Accounting for Employee
Stock Ownership Plans
d. Loans restructured in a troubled debt restructuring before the
effective date of FASB Statement No. 114, Accounting by Creditors
for Impairment of a Loan, described in paragraph 24 of FASB
Statement No. 118, Accounting by Creditors for Impairment of a
Loan—Income Recognition and Disclosures
e. Stock compensation for nonpublic and other entities (originally
addressed by FASB Statement No. 123, Accounting for Stock-Based
Compensation, or APB Opinion No. 25, Accounting for Stock Issued to
Employees) described in paragraph 83 of FASB Statement No. 123
(revised 2004), Share-Based Payment
f. For nonpublic entities electing the deferral of FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes,
FASB Statement No. 109, Accounting for Income Taxes, and related
standards
g. For business combinations with an acquisition date before the
first annual reporting period beginning on or after December 15,
2008, Statement 141 and any other relevant standards
h. For a combination of a not-for-profit entity with one or more
other not-for-profit entities, businesses, or nonprofit activities,
Opinion 16, if the combination occurred before the effective dates
of FASB Statement No. 164, Not-for-Profit Entities: Mergers and
Acquisitions.
i. Subparagraph superseded by Accounting Standards Update No.
2010-07