What Changes Were Made As A Result From The New Accounting Standards?

In 1973 the Financial Accounting Standards Board (FASB) was established to set the financial accounting standards in the United States of America for nongovernmental entities. These standards are collectively called U.S. Generally accepted Accounting Principles, or U.S. GAAP. The Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants acknowledge the authority of these standards (FASB, n.d). A “proven, independent due process” is used to collect the viewpoints of the financial statements prepares and users for the constant improvement of these standards. An Accounting Status Update(ASU) is not an authoritative source however documents the amendments to communicate the changes in the FASB Codification for a user to understand the reason and future of those changes (FASB, n.d).

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

Why did the FASB embark on a project to change the reporting standard for leases? Under the current financial reporting standards for leases, an entity has to determine the classification of leases to account for by applying bright-line rules. This creates a potential opportunity for management to structure leases in order to achieve a specific desired accounting results (FASB). In addition, the current accounting model does not require operating leases to be recognized on the balance sheet. As a result, investors may underestimate the assets and liabilities that arise from leases and, thus, cause an uninformed decision of investment. According to a 2014 study on public company filings, nearly a trillion U.S. dollars were reported in

This thesis will discuss the proposed changes of pensions and the new updated leases issued by FASB, which are important issues for entities such as corporations. FASB is the Financial Accounting Standards Board. It is a seven-member independent board consisting of accounting professionals who establish and communicate standards of financial accounting and reporting in the United States. FASB was created to provide users accurate information in one location. Recently, FASB developed the FASB Codification Research System: a web-based system allowing registered users to electronically research accounting issues.

FASB Accounting Standards Codification (ASC) 840-10-15 outlines the scope and scope exceptions for the Leases topic. ASC 840-10-15-6c provides the guidance to what constitutes a lease, and therefore governed under this topic.

The US accounting standards under Financial Accounting Standard 13 classified leases into Capital and Operating Leases. While Capital Leases transferred the lessee substantially all the risks and rewards incidental to ownership of the leases asset, it had to follow the criterion:

The most significant influence of IFRS 16/AASB 16 changes on statement of financial position might be increasing in asset and liability. As a result of the leases are classified into short-term and long-term leases instead to finance lease and operating lease under IAS 17, and all leases except short-term leases and leases of low-value assets will be recognized as lease assets and liability. In addition, the carrying amount of lease assets will decrease more rapidly than the carrying amount of lease liabilities. Thus it may lead to a decreasing in owner’s equity compared to IAS 17 requires companies with material off balance sheet

Research Proposal The Quality of financial Reporting after the passage of Sarbanes-Oxley Act Dr. Hassan Ahmed Assistant Professor at Cameron University

To get a better understanding of who these standard setters are, let’s go over a brief history and background of these two accounting standard boards. The first standard board to be discussed is FASB. FASB was created in 1973, after the Accounting Principle Board

The changes that are proposed by the International Accounting Standards Board (IASB) will affect the United States’ Generally Accepted Accounting Principles (GAAP). These changes may have the most significant effects in the areas of revenue recognition, leases, and financial instruments ( ).

Companies that generate revenue and apply US GAAP or IFRS are currently adapting to a new five-step model to recognise revenue from customer contracts. The change is the result of the newly converged standards released by the FASB and IASB in 2014. The new alliance between FASB and IASB practically replace the guidance previously stated in US GAAP and IFRS.

It will be more likely to be seen that the new revenue will be more affected towards financial entity statements and preparation of financial reports of business. Instead there also will be companies which will understand the new changes and act upon it. They will be able to work with the new standards which very much less time and working will be easier. While few of controls will acts just the opposite as they will notice as they have been working in old pattern. This will become more apprehending as to implement with the rules. As soon as an early papers will be produced it will play a major role as to understand the purpose and easy to manage new implementations. The board is also prepared two different types of standards as many see them as one single standardization policy (Damodaran, 2002). The rules and regulations of US GAAP and IFRS are seen to be similar but few of these are set to a bit of difference

On February 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (Update) on Leases (Topic 842) to communicate changes to the FASB Codification. In this Update it defines the term, Leases and also explains why FASB is issuing this Update, who will be affected by the amendments, how do the main provision differ from current Generally Accepted Accounting Principal (GAAP) and why are they an improvement, as well as explaining the transition and when the amendment will be effective.

8-1: Fair value measurement provide users with financial statements that have an accurate picture of the values of a company’s assets. IFRS and GAAP both require that firms include this information regarding the fair value measurement practices in the notes to financial statements. FASB and IASB are two different accounting standards which emphasize different types of accounts and makes financial statements be prepared in a completely different way. This causes differences which in some accounts assets and liabilities are places and it can cause structural differences in the financial

The most significant difference between a capital lease and an operating lease is how each is recognized in the financial statements. According to U.S. GAAP, a lease is capitalized if it fulfills one of the following requirements: transfer of ownership, bargain purchase option, lease term is 75% or more of economic life, or present value of minimum lease payments is 90% or more of fair value. All other lease agreements are classified as operating leases (Wahlen et al., 2013, p.20-15). Operating leases present advantages to the leasee, as they are not required to be recognized on the balance sheet, yet operating lease agreements must be disclosed in the notes to the financial statements.