Definition Of Accounting Standards Codification

Also, as mentioned previously, many groups in the industry are interested in a reform plan. Pharmaceutical companies, in particular, are interested in a plan that reduces or eliminates taxes on income earned abroad by American companies.

This means both can be viewed as tax noncompliance and could look bad by other companies. The ethical standpoint is the plant accountant should tell the president their concerns about the consequences the company could wide up facing. If the president decides to go through with the decision anyway, the accountant has already done the right steps they are suppose to but it is also important for the company to present the actual state of affairs to the stakeholders of the company.

The purpose of this research paper is to summarize research on codification topic 410 based on the information found in different academic databases. The first part of the paper will focus on the FASB Codification database. The second part of the paper will compare and contrast three other databases on the same codification 410 within the RIA Checkpoint databases: AICPA: Auditing and Accounting Guides, SOX Reporter, and GAAP Practice Manual. A summary of benefits and issues with the searches of each database will also be discussed.

Entity-wide disclosures are required under Accounting Standards Codification (ASC) 280-10-50-40 through 280-10-50-42. The disclosures are required because every corporation does not report information in a similar fashion, and the disclosures would provide comparability of the financial statements among entities. For example, if a corporation uses a geographic approach in its financial statements, disclosing certain information about the products or services sold will make comparability to other companies much easier. The disclosures will also help with comparability within an entity if they decide to choose another method of reporting operating segments in the future. There are three types of entity-wide disclosures; products and services, geographic areas, and/or major customers. Every public company has to comply with the disclosures, even if the company has one reportable segment. The only exception to the entity-wide disclosures is if it is impractical to provide the information, such as it would be extremely costly to the corporation, or if the “internal reporting systems are not capable of gathering financial information by product or service by geographic area.” A disclosure should be made when entity-wide disclosures are impractical.

Even if uniformity were to be reached, the IOSCO disclosure standards do not encircle all of the information required of an easy access to cross-border capital markets.

e LIFO cost flow method of inventory costing (Martin, J. R.). From Harry Davis’ article, a search for alternatives of the base stock method started, because of the base stock method was no longer apply to the income tax purposes, the acceptance of LIFO by professional groups represents the last part its early development. If the idea of LIFO was not being permitted, there will be a huge loss on the development of the accounting tools. Nobody will know that there is a method of inventory management could help company for the tax purpose. According to Steven Bragg’s article, nowadays, the LIFO method is not applying for IFRS. Although IRS allows the LIFO method, but it must apply for all parts of the financial reports (July, 2017). The Treasury claimed that is hard for them to management and regulate the information if LIFO were applied to a large group of people that using LIFO for the tax purposes. Congress compensated some industries with LIFO, because some of industries was unsuccessful in getting the internal revenue service to recognize of their business practices. The hearings for the 1938 Revenue Act indicate that LIFO was considered appropriate only under the conditions listed

Due to the new proposal, it will eliminate the company to perform variety of assessment of market and allow them to just use net realizable value as the primary driver of comparing the value of cost. In addition, companies will greatly benefit from this simplification from cost reduction and lower complexity in measuring the inventory. However, there is one issue that the Board still needs to address regarding the update. The Board needs to reconsider the effect of this new guidance in respect to different industries. An example would be the retail industry. The retail industry would be affected by this new guidance by creating more complexities when accounting the inventories. These complexities arise due to the change of the accounting method and when retailer using LIFO method in a declining price inventories. Retailers like Wal-Mart and Target are concerned when they are using LIFO retail inventory method, RIM, because they would record LIFO debit reserves into income. This would affect the company’s earnings to decline and it would not have a good representation in their inventory, which then would affect the accuracy of financial statement and mislead to its users. In my opinion, this is a great proposal of the Simplification Measure of Inventory. Although this would reduce the complexity and cost when measuring inventory, I still think they need to address the

The Codification’s goal is to clarify the company of thousands of U.S. authoritative accounting announcements published by diverse standard-setters. Therefore, to accomplish this objective, the FASB sponsored a project to incorporate and typically adapt all related accounting publication announced by the standard-setters of the U.S. in conjunction with those of the FASB, the Emerging Issues Task Force (EITF) and the American Institute of Certified Public Accountants

I think the biggest part of the method that is not appealing to our government is due the ability to keep a company’s income statement lower than if the company was to use the FIFO and Average cost methods and allowing those companies to pay fewer income taxes. By doing so, the company is able to have more cash flows to reinvest into itself rather it be more inventories, upgrades within the company or investing back into its workforce. In the long run, this would allow the company to grow at a better rate which could turn into more sales, higher income and eventually more taxes from those

This inflates the price of their products. These “embedded taxes” are passed on to the companies that purchase these products in the course of their own business. This effect is cumulative and happens at every stage of the supply chain, until the product reaches the consumer. In the end, the consumer pays the tax burden of every company that had a hand in the production and distribution of that product. It is estimated that these embedded taxes account for 22% of the price of products and services (Boortz and Lender 53). Under the fair tax, no product would be taxed more than once. When the consumer buys the product, the consumer pays the tax, and then the seller remits that tax to the federal government.

Furthermore, the elimination of Last-In-First-Out (LIFO) accounting standards will greatly diminish the oil and gas industry’s ability to pay comparatively less taxes on recently added inventory items that are more expensive than previously added inventory.

Duty impacts the competitive advantage by Canadian mills now have higher profits with greater volume.

Profit tax rate may be reduced to 2% in manufacturing and port, 0% in remaining categories.

Intercompany transactions could occur across national borders, it would lead MNC companies to get more exposure to the differences of the tax regulations between countries. This might lead MNC companies to set up their objective to minimize their taxes through the use of discretionary transfer prices. These issues are attracted the attention of the member of the U.S. senate, foreign governments and international organization such as the OECD, G20 and European Union (EU).

First, The International Accounting Standards Board (IASB) issues The International Financial Reporting Standards (IFRS) on U.S securities and exchange companies listed.