FASB Codification Research
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Access the FASB Codification at http://asc.fasb.org/home to prepare responses to the following exercises. Provide Codification references for your responses.
1.(a) What is the definition of amortization?
(b) What is the definition of impairment?
(c) What is the definition of recoverable amount?
(d) What are activities, as they relate to the construction of an asset?
2. Your client, Barriques Inc., is contemplating a restructuring of its operations, including the possibility of spinning off some of its assets to the original owners. However, management is unsure of the accounting for any impairment on the assets. What does the authoritative literature say about these types of impairments?
3. Your great uncle, who is a CPA, is impressed that you are majoring in accounting, but based on his experience, he believes that depreciation is something that companies do based on past practice, not on the basis of any authoritative guidance. Provide the authoritative literature to support the practice of fixed-asset depreciation.
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Solution Summary
This solution provides the reference codes for the FASB guidelines in each case in 302 words.
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1. A. What is the definition of amortization?
Amortization is the process of reducing a recognized liability systematically by recognizing revenues or reducing a recognized asset systematically by recognizing expenses or costs. In pension accounting amortization is also used to refer to systematic recognition in net pension cost over several periods of amounts previously recognized in other comprehensive income, that is, prior service costs or credits, gains or losses, and the transition asset or obligation ...
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