Category Archives: U.S. GAAP by Topic

List of updates to the codification topic 820

January 2010

Accounting Standards Update (ASU) No. 2010-06 was issued
–> Improving disclosures about fair value measurements
–> Codification topic 820-10
–> added new disclosure requirements and clarified other disclosures

List of updates to topic 820

820 Fair value measurements and disclosures

820-10_65-1: FSP FAS 157-2
–> Effective date of SFAS 157
–> effective for FYs beginning on or after November 15, 2008

820-10_65-2: FSP FAS 157-3
–> Determining the fair value of a financial asset when the market for that asset is not active
–> effective for FYs beginning on or after October 10, 2008

820-10_65-3: EITF 08-5
–> Issuer’s accounting for liabilities measured at fair value with a third-party credit enhancement
–> effective for FYs beginning on or after December 15, 2008

820-10_65-4: FSP FAS 157-4
–> Determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly
–> effective for FYs beginning on or after June 15, 2009

820-10_65-5: ASU 2009-05
–> Measuring liabilities under topic 820
–> issued in August 2009
–> effective for the first interim and annual reporting periods after issuance

820-10_65-6: ASU 2009-12
–> Investments in certain entities that calculate net asset value per share (or its equivalent)
–> effective for the first interim and annual reporting periods ending after December 15, 2009

820-10_65-7: ASU 2010-06
–> Improving disclosures about fair value measurements
–> effective for interim and annual periods beginning after December 15, 2009
–> 820-10_50-2(c)(2) effective for FYs beginning after December 15, 2010, including interim periods

Costs of software to be sold, leased, or marketed, ASC 985

Accounting Rules about Software

asc 985-20: Costs of Software to Be Sold, Leased, or Marketed
–> SFAS 86, August 1985
–> “Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed”

asc 985-605: Software Revenue Recognition
–> AICPA SOP 97-2
–> “Software Revenue Recognition”

asc 350-40: Internal-Use Software
–> AICPA SOP 98-1
–> “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”

Two points on the timeline:

(A) When the technological feasibility is established
(B) When the product is available for general release to customers

Costs of software to be sold

1. Up to (A) –> expensed
2. After (A) up to (B) –> capitalized
3. After (B) –> expense

Costs of purchased software

1. Software that has alternative future use
–> capitalized
2. Software without alternative future use
–> treated same as internal development costs

Capitalized software costs

1. Amortized on a “product-by-product” basis
2. Amortization starts at (B)
3. Amortization amount is the higher of (1) or (2)
(1) straight-line method amortization
(2) amount based on the ratio of current revenue and total expected revenue

Impairment test

1. If (a) is less than (b), (b) is written down to (a)
(a) net realizable value of the product
(b) unamortized balance
2. The difference is recognized as an expense
3. Write-down is not reversed in subsequent periods

Servicing Assets and Liabilities, ASC 860

Accounting for Servicing of Financial Assets

SFAS 156 amended SFAS 140 in March 2006
SFAS 140 replaced SFAS 125 in September 2000

SFAS 156, March 2006
“Accounting for Servicing of Financial Assets”
an amendment of FASB Statement No. 140

SFAS 140, September 2000
“Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”
a replacement of FASB Statement No. 125

SFAS 125, June 1996
” Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”

Amendments to SFAS 140 by SFAS 156 in March 2006

1. Initial measurement
Servicing Assets (SA) and Servicing Liabilities (SL) are
–> initially measured at fair value

2. Subsequent measurement
Before SFAS 156,
–> SA and SL are subsequently measured at amortized cost

SFAS 156 provides
–> a Fair Value Option for SA and SL

Entities have a choice of (A) or (B):
–> (A) Amortized cost
–> (B) Fair value

3. Separate presentation of SA and SL
–> subsequently measured at fair value