Accounting Resources: Timesaving Tricks for the FASB Codification
Accounting Resources: Timesaving Tricks for the FASB Codification

Accounting Resources: Timesaving Tricks for the FASB Codification

When the FASB Accounting Standards Codification (the FASB Codification or ASC) first went into effect in July 2009 as the preeminent resource of all U.S. GAAP accounting resources, I absolutely HATED IT.

Sure, the FASB had great intentions: They organized thousands of generally accepted accounting principles into one neat package. In place of disparate guides and wild goose chases through various accounting resources, nongovernmental entities now had one authoritative source to find answers to all U.S. GAAP inquiries.

But I already knew all the existing references and pronouncements — and could rattle off accounting resources for U.S. GAAP literature like a Baptist preacher quoting Scripture in a packed church on Sunday morning. And the congregation ate it up!

Categories of debt and marketable equity securities? No problem, that’s SFAS 115. When to accrue a loss contingency? I got it, SFAS 5. SEC criteria for revenue recognition? You got to do better than that! SAB 104. Drop mic!

So, initially, just looking at the new numbers frustrated me.

ASC 320-10-25-1

ASC 450-20-25-2

ASC 605-10-S99-1

The issuance of the FASB Codification ruined my shtick. The organization of accounting principles was confusing. Nobody had the time or patience to search for answers in multiple places.

But, after using the FASB Codification, I quickly realized that the new structure makes sense! And several years later, I’ve saved hundreds of hours using this tool — and now know that mastering this accounting resource can help every accounting professional be more efficient and effective.

And to make the process even easier, we’ve created our handy, GAAP-Dynamics–tested-and-approved FASB Codification sheet.

FASB CODIFICATION CHEAT SHEETS

Before doing anything, remember this one detail: the FASB Codification doesn’t change U.S. GAAP — it organizes U.S. GAAP.

Like a funnel, the FASB Codification lets you sift through all the information by starting with large concepts and moving to specific details. But how does it work?

images/user-uploads/FASB Codification Infographic copy.png

Every ASC number is set up in the same way: TOP-SU-SE-PP

Here’s what each acronym means:

  • TOP = Topic
  • SU = Subtopic
  • SE = Section
  • PP = Paragraph

How to Use the FASB Codification to Find Information Quickly

Step 1: Memorize the Right Information

If you can remember the nine overarching Topics and 15 Sections behind the FASB Codification, you’ll dramatically reduce the time you spend searching for information. In addition, remember that every Topic has an “Overall” Subtopic, number 10, which is always a good place to start searching for information.

The 9 Topics

  1. General Principles: ASC Topic Codes 105–199
  2. Presentation: ASC Topic Codes 205–299
  3. Assets: ASC Topic Codes 305–399
  4. Liabilities: ASCTopic Codes 405–499
  5. Equity: ASC Topic Codes 505–599
  6. Revenue: ASC Topic Codes 605-699
  7. Expenses: ASC Topic Codes 705–799
  8. Broad Transactions: ASC Topic Codes 805–899
  9. Industry Area: ASC Topic Codes 905–999

The 15 Sections

images/user-uploads/ASC Sections Infographic copy.png

Step 2: Know Where to Find Specific Topics and Subtopics

If you don’t want to spend time memorizing all 90 FASB Codification Topics or the many Subtopics, you’re in luck. Many firms have created quick reference guides where you can easily find the information you need.

Here are two helpful places to start your search:

So, how can this two-step process help you navigate accounting principles in the FASB Codification?

Let’s look at two real-world examples and watch the time savings unfold.

Example 1: You need to figure out whether something is a contingency.

If you’ve memorized the topics and sections, you’ll quickly know to look for the answer in:

  • Topic 400s, Liabilities
  • Subtopic 10, Overall
  • Section 15, Scope and Scope Exceptions, and/or Section 20, Definitions

With those three clues, you’re on your way to an answer. If you haven’t memorized the 90 Topics, reference one of the quick reference guides, and you’ll see that within the 400s, Topic 450 is Contingencies.

So, you can go to ASC 450-10-15 and ASC 450-10-20, and find the answer you need.

Example 2: You need to know how to classify investments of debt and equity securities.

If you’ve memorized the topics and sections, you’ll quickly know to look for the answer in:

  • Topic 300s, Investments
  • Subtopic 10, Overall
  • Section 25, Recognition

Then, all you need to do is check your favorite quick reference guide, and you’ll see that within the 300s, Topic 320 is “Investments – Debt and Equity Securities.”

Go to ASC 320-10-25, and you’ll have your answer in minutes.

Ultimately, the FASB Codification is like upgrading from a typewriter to a computer: Getting the most out of your new tool requires an adjustment period. But, by taking the time now to understand the FASB Codification, you’ll gain an even bigger reward — efficiency every day after. The only question you have to answer is what you’re going to do with all that free time!

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Disclaimer  

This post is published to spread the love of GAAP and provided for informational purposes only. Although we are CPAs and have made every effort to ensure the factual accuracy of the post as of the date it was published, we are not responsible for your ultimate compliance with accounting or auditing standards and you agree not to hold us responsible for such. In addition, we take no responsibility for updating old posts, but may do so from time to time.

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