Wiley GAAP: Practical Implementation Guide and Workbook

Chapter 2. STATEMENT OF FINANCIAL POSITION (ASC 210)

INTRODUCTION

Statements of financial position present information about assets, liabilities, and owners' equity. They reflect an entity's resources (assets) and its financing structure (liabilities and equity) in conformity with generally accepted accounting principles (GAAP). The statement of financial position reports the aggregate, cumulative effect of economic transactions at a point in time.

SCOPE

The requirements of ASC 210 apply to all entities that prepare "general-purpose financial statements" that are stated to be presented in accordance with GAAP. "General-purpose financial statements" are those intended to meet the needs of users who are not in a position to demand reports that are tailored according to their information needs.

DEFINITIONS OF KEY TERMS

Assets. Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.

Contributed capital. Contributed or paid-in capital is the amount of equity invested in a corporation by its owners. It consists of capital stock and additional paid-in capital.

Equity. The residual interest in assets of the reporting entity that remains after deducting its liabilities.

Liabilities. Probable future sacrifices of economic benefits arising from present obligations of past transactions or events.

STRUCTURE AND CONTENT

The format of the statement of financial position is not specified by any authoritative pronouncement. Instead, formats ...