Question

Describe Update No. 2009-01-Topic 105. describe the update and what it added to the existing authorative accounting literature.

Answer 1

Update 2009 -01 - Topic 105 are GAAP amendments based on the Statement of Financial accounting standards no 168 , the FASB Accounting Standard Codification and the hierarchy of GAAP.

The update declared the FASB accounting standards (Codification) as the single source for US Generally accepted accounting principles and also for selecting the principles while preparing non governmental financial statements. Also, the five level GAAP hierarchy has been eliminated.The following key terms were added:

(I) Non public entity

(ii) Non governmental entity

The codification will be used by the SEC in their comment letters and the grandfathered guidance is also provided.

What it added to the existing authoritative accounting literature ? The update has replaced the old accounting standard in to code form and the FASB accounting standards have been coded in to 90 topics and multiple subtopics, sections , paragraphs and subparagraphs. It is binding on all the companies that report their financials to the SEC.