Week 3 Codification Exercise

Topics: Stock market, Dividend, Stock Pages: 5 (806 words) Published: November 17, 2014
Week 3 Assignment

1. Watch the FASB Codification Tutorial – Available through the course shell http://asc.fasb.org/media/1615_Codification_MainMenu_Web/launcher.html

2. Access the codification database through your course shell and give a summary (1 paragraph) of each of the below references:

a. ASC 210-10-01

b. ASC 505-20-25

c. ASC 908-360-25

Please put it in your own words!

A/ ASC 210-10-01.

I could not find the 210-10-01 so I will over the 210-10 (General) In this section the FASB explains how the accounting standars was updated. It also talks about the securities and exchange section (SEC). We can say that the section identifies the changes to this subtopics resulting from accounting standard updates.

The SEC oversees all accounting methods and transparency for investor in the stock market. There are 5 updates we can research further.

Accounting Standards Updates:

1-Business Compbinations
2-Intangibles-Goodwill and other
3-Other Expenses
4-Financial Services- Insurance
5-Plan Accounting-Defined Contribution Pension Plans.

Information retrieved from:


A/ASC 505-20-25 Stock Dividends and Stock Splits

In this code the FASB explains the criteria for the treatment as Stock Dividend or stock split as other forms that will be explained further.

Stock Dividend in Form: Section 25-2 explains that the number of additional shares issued as stock dividend may impact the the market price. So the company will make a stock Split.

When the company dividends does not pass 20 or 25 percent of the number of previously outstanding shares would call for treatment as stock dividend.

he corporation's representations to its shareholders as to the nature of the issuance is one of the principal considerations in determining whether it shall be recorded as a stock dividend or a stock split. Nevertheless, the issuance of new shares in ratios of less than 20 or 25 percent of the previously outstanding shares, or the frequent recurrence of issuances of shares, would destroy the presumption that transactions represented to be stock splits shall be recorded as stock splits.

Retrived From: http://asc.fasb.org/section&trid=2208803

A/ASC 908-360-25 Airframe Modifications

As for this code FASB explains that plant and equipment as airframe modifications in aircrafts that enhance the use of the aircraft should be capitalized. It also explains overhaul cost and how air carriers shall adopt accounting methods that will help them recognize overhaul expenses in the appropriate period.

Accounting methods permitted:

1-Direct expensing method
2-The built in averhaul method
3-The deferral method

This code is for 908 Airlines, 360 Property, Plant and Equipment, 25 Recognition

Exercise 11

11. The financial reporting issues facing Mexico are different in some respects from those of other countries covered in this chapter. Required:
Provide two main reasons to support the above statement.

A/ Mexico has some different accounting issues because I think that when US bail out Mexico from their debt they adopted a more reliable accounting method. They had to open their financials and become more transparent with their financials.

We can also see how there is a difference in the definition of an associate from both a IFRS and Mexican GAAP point of view. This can make American investor take careful measures when thinking in investment in that country.

Preoperating and setup cost also make a big difference because irfs indicates you have to charge the expenses when incurred and the Mexican Gaap lets you capitalize them.

Differences in financial reporting:

Exercise 14

14. The NAFTA agreement has had a major impact on accounting and financial reporting by Mexican companies. Required:
Discuss the nature of the impact referred to in the preceding...
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