Submitted by: Submitted by lcazenave
Views: 897
Words: 1048
Pages: 5
Category: Business and Industry
Date Submitted: 06/06/2010 07:42 PM
Abstract
The FASB is an acronym for the Financial Accounting Standards Board. The Board is made up of seven people whose job is to establish and govern accounting practices in the United States. It is the standards of this Board that businesses make accounting decisions. In order to properly analyze the working papers for the company, I will need to make sure that the standards set forth by the FASB are adhered to. It is also important that the certain areas be studied to ensure that the proper standards are being applied. The areas that will be focused on are:
Adjusting lower cost of market inventory on valuation
Capitalizing interest on building construction
Recording gain or loss on asset disposal
Adjusting goodwill for impairment
Adjusting lower cost of market inventory
The lower of cost of market reports only downward adjustments in the value of temporary assets. The common belief is that this method provides users with more conservative balance sheet and income statement evaluations. The use of conservative evaluations is needed so investors are not misled. The FASB standards under rule SFAS No. 12 referred only to marketable equity securities and did not alter the accounting treatment required for other types of temporary investments. Under traditional GAAP, other temporary investments would have been reported by using either the cost or the lower of cost or market methods. However, if the lower of cost or market method were used, losses were recorded only when there had been a permanent impairment in value. Subsequent recoveries in market value were not recorded.
The FASB states that under the cost method, an investor shall recognize an investment in the stock of an investee as an asset an adaptation of the cost method, the lower of cost or market, has also been followed for investments in certain marketable securities if a decline in market value is evidently not a mere...