FASB Codification Guide-2

Each of the other subtopics of topic 720 does have a

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Unformatted text preview: Topic, with specific exceptions that apply only to the non-Overall Subtopic. For example, the scope declaration in Section 840-40-15 reads: ―This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic . . . with specific transaction qualifications noted below. . . .‖ If a Section 15 scope declaration is associated only with the Subtopic in which it is located, then it is considered an independent scope declaration for the Subtopic. The following are examples of independent scope declarations: The Overall Subtopic of Topic 720, Other Expenses, does not have a Section 15. Each of the other Subtopics of Topic 720 does have a Section 15 that establishes the scope of each Subtopic independently of the scope of the other Subtopics. The Overall Subtopic of Topic 210, Balance Sheet, has a Section 15 that establishes the independent scope of that Subtopic. The only other Subtopic of Topic 210 also has a Section 15 that establishes the independent scope of that Subtopic. All four kinds of Section 15 scope declarations are still subject to scope exceptions declared elsewhere within the same Subtopic. COMPREHENSIVE EXAMPLE The following comprehensive example is based on the Lesson Scenario that appears at the beginning of this lesson. Go back and review the scenario now. Then continue reading on to learn how Eric would verify the scope of guidance on accounting for advertising costs. From past experience, Eric knows that Subtopic 35, Advertising Costs, of Topic 720, Other Expenses, might be relevant to his research question. Eric navigates to paragraph 720-35-15-1 and reads ―The guidance in this Subtopic applies to all entities, including not-for-profit entities (NFPs).‖ Eric therefore knows that the entity he is auditing falls within the scope of the guidance in Subtopic 720-35, subject to scope exceptions that might be stated elsewhere in the Subtopic. Lesson 4: Understanding the Scope of Guidance 39 Look Now Go to Section 15 of each Subtopic in these examples. Observe how the wording of these Sections is significantly different from the preceding examples. Eri...
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