The codification includes a Web-based search tool. Advanced features include the ability to select multiple sections from different topics and subtopics and join them into a single document. A cross-reference feature allows users to see where current standards are located in the codification topical structure. Use of the Web-based tool is currently free.
The FASB ASC disassembled and reassembled thousands of nongovernmental accounting pronouncements (including those of FASB, the Emerging Issues Task Force, and the AICPA) to organize them under roughly 90 topics and include all accounting standards issued by a standard setter within levels A–D of the current U.S. GAAP hierarchy. The ASC also includes relevant portions of authoritative content issued by the SEC, as well as selected SEC staff interpretations and administrative guidance issued by the SEC. FASB received about 1,500 comments submitted by approximately 400 constituents during the initial verification period that ended in January. At its Feb. 25 board meeting, FASB noted that approximately 100 changes to the FASB ASC were in process as a result of the feedback received. FASB decided to include in the codification, thereby elevating in authoritative status, the AICPA Technical Inquiry Service (TIS) Section 5100, Revenue Recognition, paragraphs 38–76, which may result in an accounting change for private entities that had not previously applied the guidance.
FASB and the International Accounting Standards Board released a paper on a possible new approach to lease accounting. The paper, Leases: Preliminary Views, responds to concerns raised by investors and other financial statement users about the treatment of lease contracts under IFRS and U.S. GAAP. In the paper, the boards propose that lease accounting should be based on the principle that all leases give rise to liabilities for future rental payments and assets— the right to use the leased asset—that should be recognized in an entity’s statement of financial position. The approach is aimed at ensuring that leases are accounted for consistently across sectors and industries, the boards said in a press release.
Many lease contracts don’t appear on a balance sheet because IFRS and U.S. GAAP split leases into two categories—finance leases (capital leases under U.S. GAAP) and operating leases—and only assets and liabilities arising from finance leases are recognized in the statement of financial position. For an operating lease, the lessee simply recognizes lease payments as an expense over the lease term.
The different accounting treatment of finance and operating leases has resulted in various problems, the standard setters say. The discussion paper, available at www.fasb.org/draft/DP_Leases.pdf, is open for comment until July 17.