Financial Accounting Standards Board Codification

Cite this

The Codification is a specially developed research system that is created by the Financial Accounting Standards Board (FASB) to organize accounting standards, authoritative accounting information, and multiple reports in one system (Financial Accounting Standards Board 3). The FASB Codification consists of a variety of standards, accounting items, different topics, and references that are easy to be navigated with the help of the system.

The main goal of creating the FASB Codification was to make access for persons interested in accounting principles to GAAP much easier. It was important to create a platform where all the authoritative information could be located (Financial Accounting Standards Board 5). The developers also aimed to make the content representative in terms of currently used standards and principles. The verification period also had the key goal based on organizing all the items in the system and on receiving feedback on the structure (Financial Accounting Standards Board 5).

Standards “for state and local governments” are not part of the Codification, but it is composed of “all level A–D GAAP issued by a standard setter” (Financial Accounting Standards Board 8). In this context, the included literature provided by the FASB is presented in form of statements, interpretations, guides, bulletins, and examples. There is also content related to the Emerging Issues Task Force (Financial Accounting Standards Board 8). The other literature includes Derivative Implementation Group Issues, Accounting Interpretations, Accounting Research Bulletins, Accounting Principles Board Opinions, and American Institute of Certified Public Accountants with certain statements, guides, and bulletins (Financial Accounting Standards Board 8). The information issued by the SEC is also included in the Codification.

  1. Two definitions of “fair value” are proposed on the FASB Codification website. According to the first definition, the “fair value” is the amount “at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale” (“FASB Master Glossary” par. 12). The second definition discusses the “fair value” as the price that “would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” (“FASB Master Glossary” par. 12).
  2. The definition of “comprehensive income” is rather complex, and this term is discussed as the “change in equity (net assets) of a business entity during a period from transactions and other events and circumstances from nonowner sources” (“FASB Master Glossary” par. 18). Only investments made by owners are not discussed as these “changes in equity” during a certain period of time. Therefore, to complete the idea of the “comprehensive income”, it is necessary to refer to the net income constituents and to “all components of other comprehensive income” (“FASB Master Glossary” par. 18).

According to ASC 250-10-45-5, while choosing FIFO instead of LIFO, the Jefferson Company should refer to the retrospective accounting change approach. This approach is most effective when applying a new accounting principle in business (“FASB ASC 250-10-45”). As a result, being an SEC Registrant, the company needs to restate the prior income statements for the years 2012 and 2013 before changing the accounting principle in 2014. This approach is necessary to compare the statements for several years. The justification for the accounting principle change should also be provided according to ASC 250-10-45-12 (“FASB ASC 250-10-45”).

According to ASC 250-10-45-12, ASC 250-10-45-19, and ASC 250-10-45-20, the Maple Company needs to present or record a change from double-declining to straight-line depreciation approaches while focusing on the current and future periods (“FASB ASC 250-10-45”). Furthermore, much attention should be paid to possible differences in the tax allocation and tax assets mentioned for the current and future periods as well as to the fact that the change is permissible. It is important to remember and fix in reports that according to the double-declining method, depreciation is smaller during each following year. According to the straight-line method, the depreciation is uniform. Thus, it is necessary to apply the rate of depreciation related to the straight-line method for the following years and make assumptions for future periods.

The section ASC 235-10-50-6 provides the guidelines for the specific format of accounting disclosures to be used by businesses. The location of the disclosure can be different. It can be presented as a “separate summary of significant accounting policies” that precede the specific financial statements (“FASB ASC 250-10-50”). It can also be presented as the initial note (“FASB ASC 250-10-50”). The format of disclosures also depends on including such sections as the “Basis of consolidation”, methods of depreciation, “Amortization of intangibles”, the specific pricing for inventory, accounting details, and “Recognition of revenue” (“FASB ASC 250-10-50”). From this point, the format of accounting disclosures should be discussed with references to their content and to the place of their location in order to provide all the accounting documentation in a right manner.

Works Cited

FASB ASC 250-10-45 2015. Web.

FASB ASC 250-10-50 2015. Web.

FASB Master Glossary 2015. Web.

Financial Accounting Standards Board 2009. Accounting Standards Codification Notice to Constituents (v. 1.05). Web.

Cite this paper

Select style


BusinessEssay. (2022, April 14). Financial Accounting Standards Board Codification. Retrieved from


BusinessEssay. (2022, April 14). Financial Accounting Standards Board Codification.

Work Cited

"Financial Accounting Standards Board Codification." BusinessEssay, 14 Apr. 2022,


BusinessEssay. (2022) 'Financial Accounting Standards Board Codification'. 14 April.


BusinessEssay. 2022. "Financial Accounting Standards Board Codification." April 14, 2022.

1. BusinessEssay. "Financial Accounting Standards Board Codification." April 14, 2022.


BusinessEssay. "Financial Accounting Standards Board Codification." April 14, 2022.