Codification Case Study
1. What guidance does the Codification provide on the classification of current liabilities? (reference & brief explanation)
- Reference: FASB ASC 210-10-45-5 through 45-12
Explanation: Current liabilities are obligations due within a year. On the balance sheet the listing of current liabilities start with obligations that arise from the operating cycle such as payables incurred in the acquisition of materials and supplies, collections received in advance of the delivery of goods or performance of services and debt directly related to the operating cycle. Then other liabilities that are due within a year or less like short-term debts from the acquisition of capital assets, serial maturities of long term obligations, amounts required to be expended within a year under sinking fund provisions and …show more content…
However they are some exceptions such as precious metals with a fixed monetary value with no substantial cost of marketing. In addition, any inventories that is impossible to determine appropriate approximate costs.
4. Identify the authoritative literature that addresses disclosure information about capital structure? (reference only)
- Reference: FASB ASC 505-10-50-1 through 3
5. You and your friend, who took one accounting class, are discussing accounting (what else is there to talk about?). He believes that depreciation is something done based on past practices not on the basis of any authoritative guidance. Provide the reference to the authoritative literature to support the practice of fixed-asset depreciation. (reference only)
- Reference: FASB ASC 360-10-35-2 through 11
6. Under what condition must an employer accrue a liability for employees’ compensation for future absences? (reference & brief explanation)
- Reference: FASB ASC 710-10-25-1
Explanation: An employer can accrue a liability for employees’ compensation for future absence if the following conditions are
- Reference: FASB ASC 210-10-45-5 through 45-12
Explanation: Current liabilities are obligations due within a year. On the balance sheet the listing of current liabilities start with obligations that arise from the operating cycle such as payables incurred in the acquisition of materials and supplies, collections received in advance of the delivery of goods or performance of services and debt directly related to the operating cycle. Then other liabilities that are due within a year or less like short-term debts from the acquisition of capital assets, serial maturities of long term obligations, amounts required to be expended within a year under sinking fund provisions and …show more content…
However they are some exceptions such as precious metals with a fixed monetary value with no substantial cost of marketing. In addition, any inventories that is impossible to determine appropriate approximate costs.
4. Identify the authoritative literature that addresses disclosure information about capital structure? (reference only)
- Reference: FASB ASC 505-10-50-1 through 3
5. You and your friend, who took one accounting class, are discussing accounting (what else is there to talk about?). He believes that depreciation is something done based on past practices not on the basis of any authoritative guidance. Provide the reference to the authoritative literature to support the practice of fixed-asset depreciation. (reference only)
- Reference: FASB ASC 360-10-35-2 through 11
6. Under what condition must an employer accrue a liability for employees’ compensation for future absences? (reference & brief explanation)
- Reference: FASB ASC 710-10-25-1
Explanation: An employer can accrue a liability for employees’ compensation for future absence if the following conditions are