ACC601 Week 2: Financial Accounting Standards Board

ACC601: Capstone

Week 2: Current Issues Paper Individual Assignment

By: Adriana Alonso

May 14th, 2017

Financial Accounting Standards Board

Introduction

The FASB is the independent institution that was established in 1973. It is a private sector not for profit-organization, based in Norwalk, Connecticut, that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP). The FASB is widely recognized by the Securities and Exchange Commission as the designated accounting standard setter for public companies.

FASB standards are recognized as authoritative by many other organizations, including state Boards

One of the major changes anticipated is the requirement that would see public companies and organizations break out the reporting of their operating segments to in particular cases disclose the inventory balances of each of these segments, for example, an operating segment that would be containing in the financial or manufacturing units of a corporation.

In addition, such organizations would have to disclose the segments’ inventory components for example, how much of it consists of raw materials, work-in-process, finished goods, and supplies. In fact, private companies and public ones that do not participate in segment reporting would also have to provide component breakdowns. Component disclosures would supply investors with crucial information about a company’s revenue and cash-flow prospects (Charles Mulford, 2016).

For instance, even if a company reports a substantial amount of inventory, an analyst would not easily establish that the company did not possess enough finished goods on hand to meet purchaser demand. Another key provision in the update would require companies to disclose non-routine reasons for changes in inventory other than the routine buying, selling, and manufacturing of goods. An example of a non-routine change is the acquisition of a company that has a large supply of inventory. Other non-routine changes might stem from write-downs of

However, the ASU contains some targeted improvements that are intended to align, where necessary, lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued way back in 2014.

The FASB and the International Accounting Standards Board (IASB) initially embarked on a joint project way back in 2006 with the purpose of improving the financial reporting of leasing activities. Since then, the FASB and the IASB have issued three documents for public to express their views and for the record this generated more than 1,700 comment letters from different people.

Throughout the project, the FASB and the IASB also conducted extensive outreach with diverse groups of stakeholders. That outreach included more than 200 series of meetings with preparers and users of financial statements; 15 public roundtables, with more than 180 representatives and organizations; 15 preparer workshops attended by representatives from more than 90 organizations; and 14 meetings with preparers. The FASB and the IASB also met with more than 500 users of financial statements covering a broad range of