FASB Codification
Introduction
As an independent non-profit organization, the Financial Accounting Standards Board (FASB) plays a major role in the establishment of financial and accounting reporting standards for different companies and non-profit organizations, specifically in the United States. However, these standards are related to Generally Accepted Accounting Principles (GAAP). This paper will relate the Financial Accounting Standards Board (FASB) to the agricultural industry and some of the subtopics related to this industry.
Agricultural Industry
The agricultural industry is one of the most important industries in any country. As a result, the role and impacts of FASB codification in this industry are of significant role. Through this codification system, it becomes easy and effective to mitigate challenges related to the location, understanding, and the application of different GAAP’s hierarchy levels that are issued mainly by different standard-setting bodies over the years (Palmrose & Kinney Jr, 2018). As a result, it helps in ensuring effectiveness and positive outcomes in the simplification of the organizations of thousands of authoritative accounting pronouncements in the united states that have been provided by different standard-setters.
Subtopics
There are a total of ten different subtopics in the agricultural industry. These subtopics include 10 overall, 205 presentations of financial statements, 310 receivables, 325 investments-other, 330 inventory, 360 property, plant and equipment, 405 liabilities, 505 equality, 605 revenue recognition, and 705 costs of sales and services.
405 Liabilities
This subtopic plays an important role in providing and reporting guidance related to different liabilities, particularly those that are short-term and specific guidance that tends to or can be applied significantly to any liability. The guidance in this subtopic is therefore applied to extinguishments of different liabilities in the agricultural industry. These liabilities include both non-financial and, most importantly, financial liabilities. However, they may not be applied in cases where the non-financial and financial liabilities have been addressed in another topic. As a result, this subtopic can be related to the obligations resulting particularly from both several and joint liability agreements. In this case, the entire amount of the involved obligation tends to be fixed specifically at the reporting date. Liability, in this case, is mainly the amount required to finance specific payment obligations in this industry and what is considered as planned gifts. These may include a charitable remainder trust or a gift annuity. Logically, the liability in this subtopic is mainly computed according to how FASB has described its statement 116 that is mainly provided by the standard financial board (Ighian, 2012). As a result, it is mainly based and related to the remaining term of the involved gift, the rate of payout, and most importantly, an agreed-upon rate of interest from which future discounts can be discounted. Each charity on the other and tend to include its unique financial statements, each year its liability for all life-income gift that it includes in its force.
505 Equity
The primary role of this subtopic is to address accounting, particularly for equity by different entities related to the agricultural industries. As a result, its primary focus is the representation of specific and important accounting guidance related to different organizations in the agricultural industry.
Logically, earnings in this industry are grouped as either non-patronage or patronage. Any excess revenues over costs as a result of transactions with or in some cases for patrons are mainly considered as earning source from protonate. Non-patronage earning, on the other hand, can be related to transactions different from those of patronage. Some examples of non-patronage, particularly from investments, include rental income and insecurity incomes. Through cooperative balance sheets, organizations in the agricultural industry result in equities as a result of investments by both members and, in some cases, non-members and, most importantly, from patronage allocations. In some cases, organizations can consider accumulating unallocated retained funds that result from after-tax earnings in consideration to businesses that are non-patronage. There are different forms of allocated equities that are obtained from patronage. These equities help organizations in this industry in two major ways. First, patronage earning can be retained by focusing on methods like issuing of qualified or even non-qualified allocation, particularly through written notices. This is considered to be one of the most common and major ways that organizations depend on for financing. The second method involved retaining per-unit being used, particularly in marketing cooperatives. However, they must be based and related to debt agreements, authorizations of boards of directors, and most importantly, any involved by laws.
Accountants
Financial accountants might be focused on as an area of concern in this industry. These accountants are mainly concerned and focused on the provision of summaries, analysis, and most important reports related to financial transactions of businesses in this industry. As a result, the focus, in this case, will be on the preparation of financial statements important for use in consideration to different parties and stakeholders involved and related to businesses in the agricultural industry. Financial accounting, therefore, will involve different standards, convections, and specific rules important in ensuring effectiveness in the processes of recording, summarizing, and preparing financial statements of these organizations.
References
Ighian, D. C. (2012). A Study on Accounting Standards with Regards to Financial Instruments. Annals of the University Dunarea de Jos of Galati: Fascicle: I, Economics & Applied Informatics, 18(1).
Palmrose, Z. V., & Kinney Jr, W. R. (2018). Auditor and FASB responsibilities for representing underlying economics—What US standards actually say. Accounting Horizons, 32(3), 83-90.
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