The Financial Accounting Standards Board Essay

Since 2002, Financial Accounting Standards Board (FASB) and International Accounting Standards Board’s (IASB) have been working toward “convergence” of US General Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). They have made significant progress in efforts to converge critical accounting standards such as those dealing with revenue recognition, financial instruments and leases. Once these projects are complete, the "era" of convergence will be at an end. Nevertheless, the benefits for investors of eventually getting to consistently applied, high-quality, globally accepted accounting

The purpose of this paper is to examine and discuss ASC 840 Leases specifically Capital, Operating and Sale-Leaseback summarizing the essential components of the standard including recognition, measurement, subsequent measurement, financial, political, and economic impact for the company and its investors.

Topic 842 will require the estimation of lease terms and subsequent lease payments by companies under a criteria that cautiously take into consideration, in addition to written lease arrangements, the “economic incentives for a company to exercise an option to extend a lease term or for an entity not to exercise an option to terminate a lease”. With respect to finance leases only, the lease payments will subsequently be discounted using the company’s incremental borrowing rate to reach the lease obligation. This lease obligation will then be disclosed as a liability with an offsetting disclosure of the right to use asset as an intangible asset on the balance sheet. The amount of the right-to-use asset will also include any direct cost related to the negotiation of the lease and payment by the company. With respect to capital leases, the lessee is required to separate the interest on the lease liability and the amortized right-to-use assets on the statement of comprehensive income. The payment of interest on the lease liability and lease payments are recorded in the operating activities of the statement of cash flows. The principal portion of the lease payment will be recorded within the financing activities section of the statement of cash flows.

Leases are classified into two main types; finance lease and operating lease. The impact of each type of lease on the company’s annual report is different. When accounting for finance leases, for example, the concerned lessee makes recognition of the asset that has been leased in the statement of financial position or balance sheet and consequently charges all other finance charges including the depreciation charges relating to the leased asset on to the statement of income or profit and loss

The accounting system we use today started in Venice in renaissance period over 520 years ago. The trade business increased hugely during this time and all the financial recordings had to be written down to help people see how their business is doing. During that time in 1494 the first book about was published in accounting by Luca Paciolli and was called “The Collected Knowledge of Arithmetic, Geometry, Proportion and Proportionality”. He was called “The father of Accounting” and most of his described principles have been used up until this day.

The Financial Accounting Standards Board (FASB) is a private, not-for-profit organization whose primary purpose is to develop generally accepted accounting principles (GAAP) within the United States in the public 's interest. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S. It was created in 1973, replacing the Accounting Principles Board and the Committee on Accounting Procedure of the American Institute of Certified Public Accountants. The Financial Accounting Standards Board 's mission is "to establish and improve standards of financial accounting and reporting for the guidance and

ORL adapts a flexible business model depending on changes of the market. In general, ORL’s strategy is to provide worldwide luxury brands and it focuses on channel of distribution, extension of Asian market and licensed brand.

The Government Accounting Standards Board (GASB) issued Statement 45 (GASB 45), in June 2004, this statement establishes accounting and reporting standards for post-employment benefits other than pensions “other post-employment benefits (OPEB)” offered by state and local governments. Requiring local governments to actuarially determine their annual required contribution (ARC) to fund OPEB and to account for the unfunded amount as a liability on annual financial statements. Government employers required to comply with GASB 45 include all states, towns, education boards, public schools and all other government entities that offer OPEB and report under GASB. In this paper we will have an overview of this pronouncement and see how it will

The Financial Accounting Standards Board (FASB) was established in 1973 in order to create and develop standards of financial accounting and reporting for the general use of the public and, in particular, users of financial information including auditors, creditors and investors. This financial information is standardized for greater clarity for the guidance and education of users (FASB org, 2009a). The primary purpose of FASB as a private and non-profit organization is to develop Generally Accepted Accounting Principles (GAAP) in the United States. The FASB sets-up accounting standards for public companies in the U.S. under the mandate of the Securities and Exchange Commission (SEC). The FASB oversees the financial security; stability and

Almost 10 years ago on July 13, 2006, FASB, the Financial Accounting Standards Board issued FIN 48 the Accounting for Uncertainty in Income Taxes. FIN 48 is also known as Interpretation No. 48 that became effective during December 2006 fiscal year. It explains the uncertain tax positions regarding the calculations and disclosures of reserves in the Statement No. 109 of the FASB. The purpose of the FASB Interpretation No. 109, also referred to as, FIN 48, clarifies uncertainty in income taxes recognized by FASB Statement No. 109. The Statement does not recognize a threshold or measures the contribution for the financial statements. Accounting for income taxes (No. 109) is used for business enterprises. Also, it is applicable to

AASB 117 Leases requires lessees to classify leases as either finance leases or operating leases. The accounting treatment required under each approach is very different and this has raised concerns by investors and other financial statement users regarding the usefulness of the information provided. This essay will critically discuss and the criticisms and usefulness of lease accounting treatment. It will also examine lessee firm’s responses to Australian Standard 117 Accounting for Leases.

Existing operating and upcoming operating leases on the other hand will be classified as operating leases. The lessee’s process of recognizing, measuring, and presenting expenses and payments have not drastically shifted from current GAAP. The difference between finance leases and operating leases still exists. However, the primary difference from existing GAAP and Topic 842 is that the statement of financial position will show the lease assets and matching lease liabilities resulting from operating leases. All leases will be disclosed on the balance sheet as a right-of use asset and matching lease liability irrespective of whether they are classified as financing or operating. This will include current leased building, lease fixtures, all equipment leases etc. if any.

The Financial Accounting Standards Board (FASB) determines financial accounting and reporting standards for profit and nonprofit organizations that follow the Generally Accepted Accounting Principles (GAAP) (FASB, 2016). The FASB establishes various accounting standards that better guides the organization financially and promotes transparency with a broader understanding of its financial status through reporting of useful information that can be provided to future investors and board members. One standard is FASB Statement of Financial Accounting Standard (SFAS) 117 which enhances the “relevance, understandability, and comparability of financial statements issued by those organizations” (FASB, 2016a). The following paper provides a brief description of the nonprofit organization, the American Littoral Society (Society), summarizes findings of the financial status of the Society when considering FASB SFAS 117 and their 2015 financial statement (American Littoral Society, 2016); discusses internal and external control policies; and gives recommendations and conclusions in sustaining financial integrity.

Lease reporting regulations are contained in the GAAP FAS 13 and IFRS, IAS 17. The primary differences entail the regulations on the leveraged assets, discount rates awarded to the lessee, leaseback transactions under capital leases and operating leases as well as the profit or losses (Ashok, 2014). Therefore, a company should explore the options to come up with a workable and convenient plan corresponds to the strategic management objectives. Taking into consideration the prevailing circumstances, the CFO should instigate a comprehensive lease policy that to guide decisions in lease assets and the effect of such in the company portfolio. The principal aim should avoid circumstances that can lead to the negative listing.

Recognition and measurement of leases is an important part of accounting for leasing. Many companies and organizations rely on leasing as a means of acquiring assets without actually owning the asset. Companies often lease land and buildings, company vehicles like trucks for construction, and equipment for manufacturing or a business; like computers, copiers, and printers. Leasing allows for companies to stay in the game when it comes to new technology, so that when new technology comes out, companies will be able to start a new lease with new equipment. While leasing is a popular way of acquiring assets, it’s possible that companies and organization will pay more money for a lease then if the asset had been purchased. Leasing of