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Identify the situation under which a GASB guidance must be recognized on the face of the financial statements and also provide the conditions under which the GASB will indicate that note for disclosure will accompany an item that has been recognized on the financial statements.
Explanation of Solution
Government Accounting Standards Board (GASB): Government accounting standards board (GASB) is an independent board that establishes reporting standards for the local and state government, and also for government not-for-profit organizations that has to adhere to the generally accepted accounting principles (GAAP).
As per GASB Concepts Statement 3 it is preferable to recognize the items on the face of the financial statement only when they meet out the definition provided for the element and they have the capability of measuring the sufficient reliability that allows to record. It is advisable to provide notes to the financial statement when there is sufficient information available to satisfy the requirements of the users. For example, notes related to long-term liabilities provide information related to payment schedules, types of debt, and interest related to the debt which is not determined in the financial statement.
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Chapter 9 Solutions
Accounting for Governmental & Nonprofit Entities
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