Читать книгу Wiley GAAP: Financial Statement Disclosure Manual - Joanne M. Flood - Страница 41

Presenting one year of financial statements is acceptable under GAAP, but two years for nonpublic companies is desirable. It is common for the statement of financial position to be divided into classifications based on the length of the entity's operating cycle. Assets, liabilities, and shareholders' equity are separated in the statement of financial position so that important relationships can be shown and attention can be focused on significant subtotals. It is common for reporting entities to present the items in the order of liquidity.

Assets

Current Assets Current assets are cash and other assets that are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business (ASC 210‐10‐05‐4). When the normal operating cycle is less than one year, a one‐year period is used to distinguish current assets from noncurrent assets. When the operating cycle exceeds one year, the operating cycle will serve as the proper period for purposes of current asset classification. (ASC 210‐10‐45‐3) When the operating cycle is very long, the usefulness of the concept of current assets diminishes. The following items are classified as current assets:

 Cash and cash equivalents include cash on hand consisting of coins, currency, undeposited checks; money orders and drafts; demand deposits in banks; and certain short‐ term, highly liquid investments. Any type of instrument accepted by a bank for deposit would be considered to be cash. Cash must be available for withdrawal on demand. Cash that is restricted as to withdrawal, such as certificates of deposit, would not be included with cash because of the time restrictions. Cash must be available for current use in order to be classified as a current asset. Cash that is restricted in use would not be included in cash unless its restrictions will expire within the operating cycle. Cash restricted for a noncurrent use, such as cash designated for the purchase of property or equipment, would not be included in current assets. (ASC 210‐10‐45‐4) Cash equivalents include short‐term, highly liquid investments that:Are readily convertible to known amounts of cash, andAre so near their maturity (maturities of three months or less from the date of purchase by the entity) that they present negligible risk of changes in value because of changes in interest rates.U.S. Treasury bills, commercial paper, and money market funds are all examples of cash equivalents. Only instruments with original maturity dates of three months or less qualify as cash equivalents. (ASC 205‐10‐45‐1)

 Marketable securities representing the investment of cash available for current operations.

 Receivables include accounts and notes receivable, receivables from affiliated entities, and officer and employee receivables. The term “accounts receivable” is generally understood to represent amounts due from customers arising from transactions in the ordinary course of business (sometimes referred to as “trade receivables”).

 Inventories are goods on hand and available‐for‐sale, raw materials, work in process, operating supplies, and ordinary maintenance materials and parts. The basis of valuation and the method of pricing are to be disclosed.

 Prepaid expenses are amounts paid in advance to secure the use of assets or the receipt of services at a future date. Prepaid expenses will not be converted to cash, but they are classified as current assets because, if not prepaid, they would have required the use of current assets during the coming year or operating cycle, if longer. (ASC 205‐10‐ 45‐2) Prepaid rent and prepaid insurance are the most common examples of prepaid expenses.(ASC 210‐10‐45‐1)

Noncurrent Assets ASC 210‐10‐45‐4 excludes the following from current assets:

 Cash and claims to cash that are:Restricted as to withdrawal or use for other than current operations,Designated for expenditure in the acquisition or construction of noncurrent assets, orSegregated for the liquidation of long‐term debts.Even though not actually set aside in special accounts, funds that are clearly to be used in the near future for the liquidation of long‐term debts, payments to sinking funds, or for similar purposes shall also, under this concept, be excluded from current assets. However, if such funds are considered to offset maturing debt that has properly been set up as a current liability, they may be included within the current asset classification.

 Receivables arising from unusual transactions (such as the sale of capital assets, or loans or advances to affiliates, officers, or employees) that are not expected to be collected within 12 months.

 Investments that are intended to be held for an extended period of time (longer than one operating cycle). The following are the three major types of long‐term investments:Investments in securities––stocks, bonds, and long‐term notes receivable. Securities that are classified as available‐for‐sale or held‐to‐maturity investments are classified as long term if the entity intended to hold them for more than one year.Tangible assets not currently used in operations (e.g., land purchased as an investment and held for sale).Investments held in special funds (e.g., sinking funds, pension funds, amounts held for plant expansion, and cash surrender values of life insurance policies).

 Depreciable assetsProperty, plant, and equipment. These are disclosed with related accumulated depreciation/depletion.Intangible assets include legal and/or contractual rights that are expected to provide future economic benefits and purchased goodwill. Patents, copyrights, logos, and trademarks are examples of rights that are recognized as intangible assets.Other assets. An all‐inclusive heading that incorporates assets that do not fit neatly into any of the other asset categories (e.g., long‐term prepaid expenses, deposits made to purchase equipment, deferred income tax assets (net of any required valuation allowance), bond issue costs, noncurrent receivables, and restricted cash).

Presenting significant amounts separately is good practice.

Liabilities Liabilities are displayed on the statement of financial position in the order of expected payment.

Current Liabilities Obligations are classified as current if their liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets or to create other current obligations. (ASC 210‐10‐45‐6) Current liabilities also includes obligations that are due on demand or that are callable at any time by the lender. These are classified as current regardless of the intent of the entity or lender. ASC 470‐10‐45 includes more guidance on those and on short‐term debt expected to be refinanced. (ASC 205‐10‐45‐7) The following items are classified as current liabilities:

1 Accounts payable

2 Trade notes payable

3 Current portion of obligations under leases

4 Accrued expenses

5 Income taxes

6 Derivative liabilities

7 Dividends payable

8 Advances and deposits

9 Agency collections and withholdings

10 Current portion of long‐term debt

11 Other liabilities(ASC 210‐10‐45‐8 and 45‐9)

Noncurrent liabilities Obligations that are not expected to be liquidated within one year (or the current operating cycle, if longer) are classified as noncurrent. The following items would be classified as noncurrent:

1 Notes and bonds payable.

2 Lease obligations.

3 Written put options on the option writer's (issuer's) equity shares and forward contracts to purchase an issuer's equity shares that require physical or net cash settlement are classified as liabilities on the issuer's statement of financial position. The obligation is classified as noncurrent unless the date at which the contract will be settled is within the next year (or operating cycle, if longer).

4 Certain financial instruments that embody an unconditional obligation to issue a variable number of equity shares and financial instruments other than outstanding shares that embody a conditional obligation to issue a variable number of equity shares The obligation is classified as noncurrent unless the date at which the financial instrument will be settled is within the next year (or operating cycle, if longer).

5 Contingent obligations are recorded when it is probable that an obligation will occur as the result of a past event. The classification of a contingent liability as current or noncurrent depends on when the confirming event will occur and how soon afterward payment must be made.

6 Mandatorily redeemable shares are recorded as liabilities per ASC 480. A mandatory redemption clause requires common or preferred stock to be redeemed (retired) at a specific date(s) or upon occurrence of an event which is uncertain as to timing although ultimately certain to occur. The obligation is classified as noncurrent unless the date at which the shares must be redeemed is within the next year (or operating cycle, if longer).

7 Other noncurrent liabilities include defined benefit pension obligations, postemployment obligations, and postretirement obligations. Deferred income taxes are liabilities to pay income taxes in the future that result from differences between the carrying amounts of assets and liabilities for income tax and financial reporting purposes.

Stockholders' Equity

1 Nonredeemable preferred stock

2 Common stock

3 Treasury stock

4 Additional paid‐in‐capital

5 Accumulated other comprehensive income

6 Noncontrolling interests in consolidated subsidiaries