Explore the FASB Codification sections regarding public company financials

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Grand Canyon University *

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Accounting

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Apr 3, 2024

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Explore the FASB Codification sections regarding public company financials. Identify one concept that you did not know prior to completing this research and share it with the class, citing the code section. Identify one question that has arisen as you have explored the company's 10-Q, 10-K, or 8-K and post this question as well. While reviewing the SEC Rules, Regulations, and Interpretations, specifically Regulation S-X Rule 4-01, Form, Order and Terminology (17 CFR 210.4-01), I gained valuable insights into the importance of presenting financial statements accurately. The regulation emphasizes the need to file financial statements in a specific form and order, using commonly accepted terminology, to effectively communicate their meaning in accordance with appropriate requirements. One key concept that caught my attention is the presumption that financial statements not prepared according to generally accepted accounting principles (GAAP) will be considered misleading or inaccurate, even with disclosures. This highlights the significance of adhering to GAAP standards for transparency and reliability in financial reporting. As I review a public company's 10-K report, I started to question the specific circumstances in which certain footnotes or disclosures would be considered sufficient to address deviations from GAAP, and whether the Commission has provided any exceptions to this presumption. How does the SEC determine the adequacy of footnotes or disclosures in financial statements that deviate from generally accepted accounting principles (GAAP)? “FASB Accounting Standards Codification®.” Asc.fasb.org , 2023, asc.fasb.org/205/showallinonepage. The use of ASC 205-10-50-1 has been really important in making sure that financial reporting is clear and open. It's crucial for companies to follow this rule by giving detailed explanations for any changes in how they present similar things in their financial statements. This openness helps stakeholders understand why items have been changed, which builds trust and confidence in the financial information that's reported. In your outlook, why is it important for stakeholders, such as investors and analysts, to be able to make meaningful comparisons between financial statements of different periods? What concepts associated with public company reporting should I expect to encounter once you start working in accounting? Discuss how knowledge of these concepts will help me in my current or future job?

Working in accounting, particularly with public company reporting, involves understanding and applying various concepts that are crucial for financial transparency and compliance with regulatory requirements. Financial statements are the cornerstone of transparent and accountable business reporting. The balance sheet, income statement, and cash flow statement collectively paint a comprehensive picture of a company's financial health. The balance sheet offers a snapshot of assets, liabilities, and equity, providing insight into the firm's overall financial position. The income statement delineates revenues, expenses, and profits or losses over a specific period, revealing the operational efficiency and profitability of the business. Meanwhile, the cash flow statement tracks the sources and uses of cash, aiding in assessing liquidity and the ability to meet short-term obligations. As a financial professional, a nuanced understanding of these financial statements equips one with the tools to analyze, interpret, and communicate the financial performance of a company, facilitating informed decision-making by stakeholders and ensuring compliance with reporting standards. Understanding concepts like financial statements is crucial in my current and future accounting roles. It allows me to produce accurate financial reports, ensuring compliance and building trust among stakeholders. It's commendable that you recognize the significance of GAAP in accounting, providing a standardized framework for financial reporting. Its role as a universal rulebook ensures consistency and accuracy, making you a valuable asset in any accounting role. As you consider your post-graduation path, have you identified specific aspects of GAAP or industry sectors that particularly interest you? How did this experience change how you see the job of an accountant, and are there certain parts of making financial statements that you really enjoy or find tough? It's clear that a comprehensive understanding of financial statements, adherence to GAAP, and compliance with SEC reporting requirements are crucial for maintaining transparency and trust in public company reporting. The mention of auditing standards and the importance of staying abreast of emerging trends and regulatory changes highlights the dynamic nature of this field. In light of the emphasis on transparency and accuracy in financial reporting, how do you think advancements in technology, such as the use of artificial intelligence and automation, might impact the future of public company reporting? the treatment of contingencies under ASC 450-20 is a crucial aspect of financial reporting, as it demands a careful assessment of probabilities and estimates. It indeed adds a layer of complexity, as companies need to navigate uncertainties and make informed judgments in their disclosures. Regarding your question about goodwill impairment testing, the

methodology for such tests typically involves comparing the fair value of a reporting unit to its carrying amount, including goodwill. If the fair value is less than the carrying amount, an impairment charge is recognized. Companies often engage valuation experts to determine the fair value, using various approaches like discounted cash flow analysis, market multiples, or comparable company analysis.

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