Wiley GAAP 2020 interpretation and application by joanne

CONCEPTS, RULES, AND EXAMPLES2 ASC 205 PRESENTATION OF FINANCIAL STATEMENTSPERSPECTIVE AND ISSUES DEFINITIONS OF TERMS CONCEPTS, RULES, AND EXAMPLES 3 ASC 210 BALANCE SHEET PERSPECTIVE A

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Practitioner’s Guide to GAAP 2020

Interpretation and Application of

GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES

Joanne M Flood

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ISBN 978-1-119-65262-5 (Paperback)

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CONCEPTS, RULES, AND EXAMPLES

2 ASC 205 PRESENTATION OF FINANCIAL STATEMENTSPERSPECTIVE AND ISSUES

DEFINITIONS OF TERMS

3 ASC 210 BALANCE SHEET

PERSPECTIVE AND ISSUES

4 ASC 215 STATEMENT OF SHAREHOLDER EQUITYPERSPECTIVE AND ISSUES

5 ASC 220 INCOME STATEMENT—REPORTING

COMPREHENSIVE INCOME

TECHNICAL ALERT

6 ASC 230 STATEMENT OF CASH FLOWS

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7 ASC 235 NOTES TO FINANCIAL STATEMENTS

8 ASC 250 ACCOUNTING CHANGES AND ERROR

CORRECTIONS

9 ASC 255 CHANGING PRICES

10 ASC 260 EARNINGS PER SHARE

COMPREHENSIVE EXAMPLE

11 ASC 270 INTERIM REPORTING

REQUIREMENTS APPLICABLE TO ALL REPORTINGENTITIES

REQUIREMENTS APPLICABLE TO PUBLIC REPORTINGENTITIES

12 ASC 272 LIMITED LIABILITY ENTITIES

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13 ASC 274 PERSONAL FINANCIAL STATEMENTS

14 ASC 275 RISKS AND UNCERTAINTIES

15 ASC 280 SEGMENT REPORTING

17 ASC 320 INVESTMENTS—DEBT AND EQUITY SECURITIESPERSPECTIVE AND ISSUES

18 ASC 320 INVESTMENTS—DEBT SECURITIES

19 ASC 321 INVESTMENTS—EQUITY SECURITIES

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20 ASC 323 INVESTMENTS—EQUITY METHOD AND

JOINT VENTURES

CONCEPTS, RULES, AND EXAMPLES—ASC 323-10,

OVERALL: THE EQUITY METHOD OF ACCOUNTING FOR

INVESTMENTS

EQUITY INVESTMENTS IN CORPORATE JOINT

VENTURES AND NONCORPORATE ENTITIES

CONCEPTS, RULES, AND EXAMPLES—ASC 323-740,QUALIFIED AFFORDABLE HOUSING PROJECT

22 ASC 326 FINANCIAL INSTRUMENTS—CREDIT LOSSESPERSPECTIVE AND ISSUES

OVERALL

MEASURED AT AMORTIZED COST

AVAILABLE-FOR-SALE DEBT SECURITIES

23 ASC 330 INVENTORY

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24 ASC 340 OTHER ASSETS AND DEFERRED COSTS

25 ASC 350 INTANGIBLES—GOODWILL AND OTHER

GENERAL INTANGIBLES OTHER THAN GOODWILL

INTERNAL-USE SOFTWARE

WEBSITE DEVELOPMENT COSTS

26 ASC 360 PROPERTY, PLANT, AND EQUIPMENT

28 ASC 410 ASSET RETIREMENT AND ENVIRONMENTALOBLIGATIONS

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ASC 410-20, ASSET RETIREMENT OBLIGATIONS

ASC 410-30, ENVIRONMENTAL OBLIGATIONS

29 ASC 420 EXIT OR DISPOSAL COST OBLIGATIONS

30 ASC 430 DEFERRED REVENUE

35 ASC 480 DISTINGUISHING LIABILITIES FROM EQUITYPERSPECTIVE AND ISSUES

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36 ASC 505 EQUITY

37 ASC 605 REVENUE RECOGNITION

REVENUE RECOGNITION—GENERAL PRINCIPLES

38 ASC 606 REVENUE FROM CONTRACTS WITH CUSTOMERSOVERVIEW

STEP 1: IDENTIFY THE CONTRACT WITH THE

CUSTOMER

STEP 2: IDENTIFYING THE PERFORMANCE

OBLIGATIONS

STEP 3: DETERMINE THE TRANSACTION PRICE

STEP 4: ALLOCATE THE TRANSACTION PRICE

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STEP 5: RECOGNIZE REVENUE WHEN (OR AS) THEENTITY SATISFIES A PERFORMANCE OBLIGATIONOTHER ISSUES

39 ASC 610 OTHER INCOME

40 ASC 705 COST OF SALES AND SERVICES

41 ASC 710 COMPENSATION— GENERAL

42 ASC 712 COMPENSATION—NONRETIREMENT EMPLOYMENT BENEFITS

POST-PERSPECTIVE AND ISSUES

43 ASC 715 COMPENSATION—RETIREMENT BENEFITSPERSPECTIVE AND ISSUES

ASC 715-10, DEFINED BENEFIT PLANS—OVERALLASC 715-20, DEFINED BENEFITS PLANS—GENERALASC 715-30, DEFINED BENEFIT PLANS—PENSION

44 ASC 718 COMPENSATION— STOCK COMPENSATIONPERSPECTIVE AND ISSUES

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45 ASC 720 OTHER EXPENSES

46 ASC 730 RESEARCH AND DEVELOPMENT

47 ASC 740 INCOME TAXES

48 ASC 805 BUSINESS COMBINATIONS

49 ASC 808 COLLABORATIVE ARRANGEMENTS

THE VIE MODEL

VOTING INTEREST MODEL

51 ASC 815 DERIVATIVES AND HEDGING

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52 ASC 820 FAIR VALUE MEASUREMENTS

53 ASC 825 FINANCIAL INSTRUMENTS

ASC 825-20, REGISTRATION PAYMENT ARRANGEMENTS

54 ASC 830 FOREIGN CURRENCY  MATTERS

ACCOUNTS TO BE REMEASURED USING HISTORICALEXCHANGE RATES

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58 ASC 845 NONMONETARY TRANSACTIONS

59 ASC 850 RELATED-PARTY DISCLOSURES

61 ASC 853 SERVICE CONCESSION ARRANGEMENTS

62 ASC 855 SUBSEQUENT EVENTS

63 ASC 860 TRANSFERS AND SERVICING

64 ASC 900s SPECIALIZED INDUSTRY GAAP

CONTRACTORS—FEDERAL GOVERNMENT (ASC 912)PERSPECTIVE AND ISSUES

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ENTERTAINTMENT—BROADCASTERS (ASC 920)PERSPECTIVE AND ISSUES

ENTERTAINMENT—CABLE TELEVISION (ASC 922)PERSPECTIVE AND ISSUES

EXTRACTIVE ACTIVITIES—OIL AND GAS (ASC 932)PERSPECTIVE AND ISSUES

FINANCIAL SERVICES—DEPOSITORY AND LENDING(ASC 942)

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FINANCIAL SERVICES—INSURANCE (ASC 944)

FINANCIAL SERVICES—INVESTMENT COMPANIES (ASC946)

FINANCIAL SERVICES—MORTGAGE BANKING (ASC 948)PERSPECTIVE AND ISSUES

FINANCIAL SERVICES—TITLE PLANT (ASC 950)

CONCEPTS AND RULES

NOT-FOR-PROFIT ENTITIES (ASC 958)

PLAN ACCOUNTING (ASC 960, ASC 962, ASC 965)

REAL ESTATE—GENERAL (ASC 970)

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REAL ESTATE—RETAIL LAND (ASC 976)

REAL ESTATE TIME-SHARING ACTIVITIES (ASC 978)PERSPECTIVE AND ISSUES

REGULATED OPERATIONS (ASC 980)

SOFTWARE (ASC 985)

APPENDIX A DEFINITIONS OF TERMS

APPENDIX B DISCLOSURE AND PRESENTATION CHECKLISTFOR COMMERCIAL BUSINESSES

INDEX

End User License Agreement

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Wiley GAAP 2020: Interpretation and Applicationprovides analytical

explanations, copious illustrations, and nearly 300 examples of all currentgenerally accepted accounting principles The book integrates principles

promulgated by the FASB in its Accounting Standards Codification.TM

Wiley GAAP is organized to align fully with the structure of the FASB

Codification Each chapter begins with a list of the subtopics included

within the topic, scope, scope exceptions, technical alerts of any FASBUpdates, and an overview of the topic The remainder of each chapter

contains a detailed discussion of the concepts and practical examples andillustrations This organization facilitates the primary objective of the book

—to assist financial statement preparers and practitioners in resolving themyriad practical problems faced in applying GAAP

Hundreds of meaningful, realistic examples guide users in the application ofGAAP to the complex fact situations that must be dealt with in the realworld practice of accounting In addition to this emphasis, a major strength

of the book is that it explains the theory of GAAP in sufficient detail toserve as a valuable adjunct to accounting textbooks Much more than

merely a reiteration of currently promulgated GAAP, it provides the userwith the underlying conceptual bases for the rules It facilitates the process

of reasoning by analogy that is so necessary in dealing with the

complicated, fast-changing world of commercial arrangements and

transaction structures It is based on the author’s belief that proper

application of GAAP demands an understanding of the logical

underpinnings of all its technical requirements

As a bonus, a comprehensive presentation and disclosure checklist,

available online to all Wiley GAAP purchasers, offers practical guidance on

preparing financial statements for commercial entities in accordance withGAAP For easy reference and research, the checklist also follows the order

of the Codification Go to www.wiley.com/go/GAAP2020 (see Appendix Bfor password)

The author’s wish is that this book will serve preparers, practitioners,

faculty, and students as a reliable reference tool to facilitate their

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understanding of, and ability to apply, the complexities of the authoritativeliterature.

ASUs Issued Since Previous Edition The following FASB Accounting

Standards Updates (ASUs) were issued since Wiley GAAP 2019 and

through June 2020 Their requirements are incorporated into this edition of

Wiley GAAP, as and where appropriate, and/or in the Technical Alert

section at the beginning of the topic referenced in the ASU title

ASU 2018-07—Compensation—Stock Compensation (Topic 718):Improvements to Nonemployee Share-Based Payment AccountingASU 2018-08—Not-for-Profit Entities (Topic 958): Clarifying theScope and the Accounting Guidance for Contributions Received andContributions Made

ASU 2018-09—Codification Improvements [Revised 07/18/18—Wording corrected in summary to reflect actual codification wording.]ASU 2018-10—Codification Improvements to Topic 842, LeasesASU 2018-11—Leases (Topic 842): Targeted Improvements

ASU 2018-12—Financial Services—Insurance (Topic 944): TargetedImprovements to the Accounting for Long-Duration Contracts

ASU 2018-13—Fair Value Measurement (Topic 820): DisclosureFramework—Changes to the Disclosure Requirements for Fair ValueMeasurement

ASU 2018-14—Compensation—Retirement Benefits—Defined

Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit PlansASU 2018-15—Intangibles—Goodwill and Other—Internal-Use

Software (Subtopic 350-40): Customer’s Accounting for

Implementation Costs Incurred in a Cloud Computing ArrangementThat Is a Service Contract (a consensus of the FASB Emerging IssuesTask Force)

ASU 2018-16—Derivatives and Hedging (Topic 815): Inclusion of theSecured Overnight Financing Rate (SOFR) Overnight Index Swap(OIS) Rate as a Benchmark Interest Accounting Purposes

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ASU 2018-17—Consolidation (Topic 810): Targeted Improvements toRelated Party Guidance for Variable Interest Entities

ASU 2018-18—Collaborative Arrangements (Topic 808): Clarifyingthe Interaction between Topic 808 and Topic 606

ASU 2018-19—Codification Improvements to Topic 326, FinancialInstruments—Credit Losses

ASU 2018-20—Leases (Topic 842): Narrow-Scope Improvements forLessors

ASU 2019-01—Leases (Topic 842): Codification Improvements

ASU 2019-02—Entertainment—Films—Other Assets—Film Costs(Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-35 to Accounting for Costs ofFilms and License Agreements for Program Materials (a consensus ofthe Emerging Issues Task Force)

ASU 2019-03—Not-for-Profit Entities (Topic 958): Updating the

Definition of Collections

ASU 2019-04—Codification Improvements to Topic 326, FinancialInstruments—Credit Losses, Topic 815, Derivatives and Hedging, andTopic 825, Financial Instruments

ASU 2019-05—Financial Instruments—Credit Losses (Topic 326):Targeted Transition Relief

ASU 2019-06—Intangibles—Goodwill and Other (Topic 350) andNot-for-Profits (Topic 958): Extending the Private Company

Accounting Alternatives on Goodwill and Certain Identifiable Assets

to Not-for-Profit Entities

On the Horizon Significant accounting changes are on the horizon In the

next year, the FASB is expected to make strides on the following majorprojects and others:

Disclosure framework projects

Collaborative arrangements

Benchmark interest rate for hedge accounting

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Simplifying the balance sheet classification of debt

Readers are encouraged to check the FASB website for status updates to theabove and other FASB projects

Joanne M Flood

June 2019

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About the Author

Joanne M Flood, CPA, is an author and independent consultant on

accounting and auditing technical topics and e-learning She has experience

as an auditor in both an international firm and a local firm and worked as asenior manager in the AICPA’s Professional Development group She

received her MBA summa cum laude in accounting from Adelphi

University and her bachelor’s degree in English from Molloy College

While in public accounting, Joanne worked on major clients in retail,

manufacturing, and finance and on small business clients in construction,manufacturing, and professional services At the AICPA, she developed andwrote e-learning, text, and instructor-led training courses on U.S and

international standards She also produced training materials in a wide

variety of media, including print, video, and audio, and pioneered the

AICPA’s e-learning product line Joanne resides on Long Island, New York,with her daughter, Elizabeth Joanne is the author of the following Wileypublications:

Financial Disclosure Checklist

Wiley GAAP 2020: Interpretation and Application of Generally

Accepted Accounting Principles

Wiley Practitioner’s Guide to GAAS 2019: Covering all SASs, SSAEs, SSARSs, and Interpretations

Wiley GAAP: Financial Statement Disclosures Manual (Wiley

Regulatory Reporting)

Wiley Revenue Recognition

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Codification Taxonomy

Topic # and title Subtopic # and title

I General Principles and Objectives

105 Generally Accepted

Accounting

10

105-Overall Principles

II Overall Financial Reporting, Presentation, and Display Matters

A Overall Presentation of Financial Statements

205 Presentation of

Financial Statements

10

205-Overall

20

205-DiscontinuedOperations205-

30

Liquidation Basis ofAccounting

40

210-Offsetting

215 Statement of

Shareholders’ Equity

10

220-Unusual or InfrequentlyOccurring Items

30

220-Business InterruptionInsurance

230 Statement of Cash

Flows

10

230-Overall

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235 Notes to Financial

Statements

10

235-Overall

B Various Financial Reporting, Presentation, and Display Matters

250 Accounting Changes

and Error Corrections

10

270-Income Taxes

272 Limited Liability

Entities

10

272-Overall

274 Personal Financial

Statements

10

III Transaction-Related Topics

A Financial Statement Accounts

310-10

Overall

20

310-Nonrefundable Feesand Other Costs310-

30

Loans and DebtSecurities Acquiredwith DeterioratedCredit Quality

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40

310-Troubled DebtRestructurings byCreditors

323-Partnerships, JointVentures, and LimitedLiability Entities

325-10

Overall

20

325-Cost MethodInvestments325-

30

Investments inInsurance Contracts325-

40

Beneficial Interests inSecuritized FinancialAssets

326 Financial Instruments

—Credit Losses

10

326-Overall

20

326-Measured at AmortizedCost

20-30

326-Available-for-SaleSecurities

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340 Other Assets and

Deferred Costs

10

340-Overall

20

340-Capitalized AdvertisingCosts

30

340-Insurance ContractsThat Do Not TransferInsurance Risk

350-Overall

30

350-General IntangiblesOther Than Goodwill350-

40 Internal-Use Software350-

50

Website DevelopmentCosts

360 Property, Plant, and

20

360-Real Estate Sales

20

405-Extinguishment ofLiabilities

405-30 Insurance-RelatedAssessments405-

40

Obligations Resultingfrom Joint and SeveralLiabilities

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410 Asset Retirement and

EnvironmentalObligations

420 Exit or Disposal Cost

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60

470-Troubled DebtRestructurings byDebtors

605-Services

605-25 Multiple-ElementArrangements605-

28

Milestone Method

605-30 Rights to Use605-

35

Construction-Type andProduction-Type

Contracts605-

40

Gains and Losses

45

605-Principal AgentConsiderations

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50

605-Customer Paymentsand Incentives

Contracts withCustomers

10

705-Overall

20

705-Accounting forConsideration Receivedfrom a Vendor1

General

10

710-Overall

Nonretirement

10

712-OverallPostemploymentBenefits

Retirement Benefits

10

715-Overall

20

715-Defined Benefit Plans

—General715-

30

Defined Benefit Plans

—Pensions715-

60

Defined Benefit Plans

—Other Postretirement

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70

715-Defined ContributionPlans

80

715-Multiemployer Plans

Compensation

10

718-Overall

20

718-Awards Classified asEquity

30

718-Awards Classified asLiabilities

40

718-Employee StockOwnership Plans718-

50

Employee SharePurchase Plans718-

720-Start-Up Costs

20

720-Insurance Costs

25

720-Contributions Made

30

720-Real and PersonalProperty Taxes720-

35

Advertising Costs

40

720-Electronic EquipmentWaste Obligations

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45

720-Business andTechnologyReengineering720-

50 Fees Paid to the FederalGovernment by

PharmaceuticalManufacturers andHealth Insurer

730 Research and

Development

10

730-Overall

20

730-Research andDevelopmentArrangements

20

740-Intraperiod TaxAllocation740-

30 Other Considerations orSpecial Areas

B Broad Transactional Categories

805-10

Overall

20

805-Identifiable Assets andLiabilities, and AnyNoncontrolling Interest805-

30 Goodwill or Gain fromBargain Purchase,

IncludingConsiderationTransferred805-

40

Reverse Acquisitions

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50

805-Related Issues

740

805-Income Taxes

808 Collaborative

Arrangements

10

810-Control of Partnershipsand Similar Entities810-

30

Research andDevelopmentArrangements

815 Derivatives and

Hedging

10

815-Overall

815-15 Embedded Derivatives815-

820-Overall

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825-10

Overall

20

825-Registration PaymentArrangements

830 Foreign Currency

Matters

10

830-Overall

20

830-Foreign CurrencyTransactions830-

30

Translation of FinancialStatements

230

830-Statement of CashFlows

740

835-Capitalization ofInterest

30

840-Operating Leases

30

840-Capital Leases

40

840-Sale-LeasebackTransactions

Transactions

10

845-Overall

850 Related-Party

Disclosures

10

850-Overall

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852-10

Overall

20

852-Quasi-Reorganization

740

852-Income Taxes

853 Service Concession

Arrangements

10

860-Sales of FinancialAssets

30

860-Secured Borrowingsand Collateral

40

860-Transfers to QualifyingSpecial-Purpose

Entities860-

50 Servicing Assets andLiabilities

IV Industry/Unique Topics

910-Overall

20

910-Contract Costs

912 Contractors—Federal

Government

10

912-Overall

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20

912-Contract Costs

915 Development Stage

Entities

10

915-Overall

Broadcasters

10

920-Overall

922 Entertainment—Cable

Television

10

922-Overall

Casinos

10

926-Other Assets—FilmCosts

930-Overall

932 Extractive Activities—

Oil and Gas

10

932-Overall

940 Financial Services—

Brokers

10

940-Overall and Dealers

Depository

10

942-Overall and Lending

Insurance

10

944-Overall

20

944-Insurance Activities

30

944-Acquisition Costs

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40

944-Claim Costs andLiabilities for FuturePolicy Benefits944-

50 Policyholder Dividends944-

Defined Benefit 960-10 Overall Pension Plans

20

960-Accumulated PlanBenefits

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30

960-Net Assets Availablefor Plan Benefits960-

962-Overall ContributionPension Plans

40

962-Terminating Plans

Health and Welfare

10

965-Overall Benefit Plans

20

965-Net Assets Availablefor Plan Benefits965-

30

Plan BenefitsObligations965-

972-Overall RealtyAssociations

974 Real Estate—Real

Estate

10

974-Overall InvestmentTrusts

976 Real Estate—Retail

Land

10

976-Overall

978 Real

Estate—Time-Sharing Activities

10

980-Discontinuation ofRate-RegulatedAccounting

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985-10

Overall

20

985-Costs of Software to BeSold, Leased, or

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Other and Nonauthoritative Sources

SEC Guidance in the Codification

The Standards-Setting Process

Accounting Standards Updates

Maintenance Updates

American Institute of Certified Public Accountants

Researching GAAP Problems

Codification Structure

Research Procedures

Step 1: Identify the Problem

Step 2: Analyze the Problem

Step 3: Refine the Problem Statement

Step 4: Identify Plausible Alternatives

Step 5: Develop a Research Strategy

Step 6: Search Authoritative Literature (Described in Additional Detail Below) Step 7: Evaluation of the Information Obtained

Search Authoritative Literature (Step 6)—Further Explanation

Researching Wiley GAAP.

Researching Nonpromulgated GAAP

Internet-Based Research Sources

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