Wiley GAAP 2014: Interpretation and Application of Generally Accepted Accounting Principles

8   ASC 235 NOTES TO FINANCIAL STATEMENTS

Perspective and Issues

Definitions of Terms

Concepts, Rules, and Examples

Accounting Policies

Commonly disclosed accounting policies

Initial adoption decisions

Disclosure Techniques

Parenthetical explanations

Notes to financial statements

Cross-references

Valuation allowances (sometimes referred to as “contra” amounts)

PERSPECTIVE AND ISSUES

ASC 235, Notes to Financial Statements, contains one Subtopic:

• ASC 235-10, Overall, which addresses “the content and usefulness of the accounting policies judged by management to be most appropriate to fairly present the entity's financial statement.”

The topic does not address specific disclosures. Those are addressed in the related topics. The topic does, however, list accounting policy disclosures commonly required:

• Basis of consolidation
• Depreciation methods
• Amortization of intangibles
• Inventory pricing
• Accounting for recognition of profit on long-term construction-type contracts
• Recognition of revenue from franchising and leasing operations.

  (ASC 235-10-50-4)

DEFINITIONS OF TERMS

There is no glossary in ASC 235.

CONCEPTS, RULES, AND EXAMPLES

Accounting Policies

The reporting entity's management is responsible for adopting and adhering to the highest quality accounting policies possible. ASC 235 requires management, in discharging this responsibility, to adopt accounting principles and methods of applying them that are “the most appropriate in the circumstances to present fairly financial position, ...