Generally Accepted Accounting Principles
in the United States

U.S. GAAP Codification IFRS International Standards Accounting Topics


Restatement and Revision of Accounting Research Bulletins
Accounting Research Bulletin (ARB) No. 43


U.S. GAAP Codification IFRS, IAS by Topic,  Accounting Terms
Principles of AccountingIntermediate Accounting Advanced Accounting
Accounting Standards ASC Accounting by Topic,  Accounting Textbooks
Securities Law Library U.S. Tax Code by Section


Accounting Research Bulletin (ARB) No. 43
   
Accounting Research Bulletin (ARB) No. 43
        a.  Restatement and Revision of Accounting Research Bulletins
        b.  Issued in June 1953

Chapters of ARB No. 43

Chapter 1:  Prior Opinions
     Section A:  Rules Adopted by Membership

         Unrealized profit
                 --> NOT credited to income.

         Profit is assumed to be realized
                 --> when a sale is completed
                 --> in the ordinary course of business

         Capital surplus
                 --> should not be used to offset
                       income account losses.

         Notes or accounts receivable
                 from officers, employees, or affiliated companies

                 --> must be shown separately.

     Section B:  Opinion Issued by Predecessor Committee

         Profits and Losses on Treasury stock
                 --> should be reflected in capital surplus.

Chapter 2:  Forms of Statements
     Section A:  Comparative Financial Statements

         Comparative financial statements
                 --> make financial statements more useful.

         It is desirable that
                 --> financial statements
                       be given for one or more preceding years
                       (as well as for the current year)

     Section B:  Combined Statement of Income and Earned Surplus
                 --> Chapter 2B: deleted by APB Opinion No. 9 (December 1966)


Chapter 3:  Working Capital
     Section A:  Current assets and current liabilities

         Working capital
                 = current assets - current liabilities

         Working capital (also called net working capital) APB Opinion No. 9
                 --> represents the liquid portion of capital
                 --> a margin for meeting obligations
                       (within the ordinary operating cycle)

         Current assets
                 --> assets that are reasonably expected
                       to be realized in cash (or sold or consumed)
                       within one-year or normal operating cycle,
                       whichever is longer.
                      
         Current liabilities
                 --> obligations that are reasonably expected
                       to be liquidated
                       within one-year or normal operating cycle,
                       whichever is longer.

         Funds to be used to pay debts
                 --> Funds to be used for liquidation of long-term debts are
                       excluded from current assets.

                 --> Funds to be used for liquidation of current liabilities are
                       reported as current assets.

         Current liabilities do NOT include:
                 --> debts to be liquidated by funds
                       not classified as current assets.

 
     Section B:  Application of U.S. Government Securities against Liabilities for Federal Taxes on Income
                 --> Chapter 3B: replaced by APB Opinion No. 10 (December 1966)


Chapter 4:  Inventory Pricing

     Statement 1
         Inventory refers to
                 --> tangible personal property
                       a.  held for sale in the ordinary course of business,
                       b.  in process of production for such sale, or
                       c.  are to be currently consumed in the production.

     Statement 2
         Objective of accounting for inventories
                 --> to properly determine the income
                       (through the process of matching costs against revenues.)

     Statement 3
         Primary basis of accounting for inventories
                 --> is cost.

         Cost of inventories
                 --> sum of expenditures incurred
                       to bring inventories to its current condition (and location).

     Statement 4
         Cost may be determined
                 --> under any one of several assumptions
                       about the flow of cost factors.

         Examples of cost flow assumptions
                 --> first-in first-out
                       last-in first-out
                       average

         Objective of selecting a cost flow assumption is
                 --> to choose the one which most clearly
                       reflects periodic income.

     Statement 5
         Lower of cost or market
                 --> A departure from the cost basis is required
                 --> when the utility of goods is less than cost.

     Statement 6
         Market means current replacement cost except that:
                 --> a.  Market should not exceed the net realizable value
                            (i.e., estimated selling price - cost of completion and disposal)
 
                 --> b.  Market should not be less than net realizable value
                            reduced by an allowance for normal profit margin.

     Statement 7
         Lower of cost or market may be applied
                 --> a.  to each item or
                       b.  to the total of each major category or
                       c.  to the total of inventory.

     Statement 8
         The basis of inventory valuation
                 --> must be consistently applied and
                 --> should be disclosed in the financial statements.

     Statement 9
         Inventories may be stated above cost
                 --> only in exceptional cases (e.g., precious metals)

     Statement 10
         Accrued net losses on
                 firm purchase commitments for inventories

                 --> measured in the same way as inventory losses,
                 --> should be recognized in the accounts and the amounts
                       separately disclosed in the financial statement.


Chapter 5:  Intangible Assets

                --> Chapter 5: deleted by APB Opinion No. 17 (August 1970)
                --> APB Opinion No. 17: superseded by SFAS No. 142 (June 2001)


Chapter 6: Contingency Reserves

               
--> Chapter 6: deleted by SFAS No. 5 (March 1975)


Chapter 7:  Capital Accounts
     Section A:  Quasi-Reorganization or Corporate Readjustment

     Section B:  Stock Dividends and Stock Split-up

         Stock Dividend
           --> Issuance of its own stock to shareholders
                 without consideration
           --> to distribute retained earnings to shareholders.

         Accounting for Stock Dividend
           --> Retained earnings is transferred
                 to capital stock and additional paid-in capital
           --> for the amount of
                 fair value of additional shares issued
                
         Stock Split
           --> Issuance of its own stock to shareholders
                 without consideration
           --> to reduce per share price
                 by increasing number of outstanding shares.

         Accounting for Stock Split
           --> Retained earnings is not transferred to capital stock.

         Issuance of additional shares of more than 25 percent
           --> Recorded as stock splits.


     Section C:  Business Combinations
                 --> Chapter 7C: deleted by ARB No. 48 (January 1957)
                 --> ARB No. 48: superseded by APB Opinion No. 16 (August 1970)
                 --> APB Opinion No. 16: superseded by SFAS No. 141 (June 2001)


Chapter 8:  Income and Earned Surplus

                --> Chapter 8: deleted by APB Opinion No. 9 (December 1966)


Chapter 9:  Depreciation
     Section A:  Depreciation and High Costs

     Section B:  Depreciation on Appreciation
                 --> Chapter 9B: replaced by APB Opinion No. 6 (October 1965)

     Section C:  Emergency Facilities: Depreciation, Amortization and Income Taxes


Chapter 10:  Taxes
     Section A:  Real and Personal Property Taxes

     Section B:  Income Taxes
                 --> Chapter 10B: deleted by APB Opinion No. 11 (December 1967)
                 --> APB Opinion No. 11: superseded by SFAS No. 96 (December 1987)
                 --> SFAS No. 96: superseded by SFAS No. 109 (February 1992)


Chapter 11:  Government Contracts
     Section A:  Cost-Plus-Fixed-Fee (CPFF) Contracts

         Fees under CPFF contracts
                 --> may be credited to income
                       on the basis of partial performance
                       (with reasonable assurance of realization)

         Fees may be accrued
                 --> as they are billable.

         Reimbursable costs and fees are
                 --> included in sales or other revenue accounts.

         Unbilled costs and fees are
                 --> receivables.

     Section B:  Renegotiation

     Section C:  Terminated War and Defense Contracts


Chapter 12:  Foreign Operations and Foreign Exchange



Chapter 13:  Compensation
     Section A:  Pension Plans: Annuity Costs Based on Past Service
                 --> Chapter 13A: deleted by APB Opinion No. 8 (November 1966)
                 --> APB Opinion No. 8: superseded by SFAS No. 87 (December 1985)

     Section B:  Compensation Involved in Stock Option and Stock Purchase Plans
                 --> Chapter 13B: amended by APB Opinion No. 25 (October 1972)
                 --> APB Opinion No. 25: superseded by SFAS No. 123 (Revised)
                 --> Chapter 13B: deleted by SFAS No. 123 (Revised) (December 2004)


Chapter 14:  Disclosure of Long-Term Leases in Financial Statements of Lessees
 
                 --> Chapter 14: deleted by APB Opinion No. 5 (November 1966)
                 --> APB Opinion No. 5: superseded by SFAS No. 13 (November 1976)

Chapter 15:  Unamortized Discount, Issue Cost, and Redemption Premium on Bonds Refunded

                 --> Chapter 15: deleted by APB Opinion No. 26 (October 1972)
 

Accounting Research Bulletins (ARB) No. 43-51
 
     Accounting Research Bulletins (ARB) 
     No. 43: Restatement and Revision of Accounting Research Bulletins (June 1953)

     No. 44: Declining-Balance Depreciation (October 1954)
            --> ARB No. 44: superseded by revised version of ARB No. 44 (July 1958)

     No. 44 (Revised): Declining-balance Depreciation (July 1958)
            --> ARB No. 44 (Revised): superseded by SFAS No. 96 (December 1987)

     No. 45: Long-Term Construction-Type Contracts (October 1955)

     No. 46: Discontinuance of Dating Earned Surplus (February 1956)

     No. 47: Accounting for Costs of Pension Plans (September 1956)
            --> ARB No. 47: superseded by APB Opinion No. 8 (November 1966)
            --> APB Opinion No. 8:  superseded by SFAS No. 87 (December 1985)

     No. 48: Business Combinations (January 1957)
            --> ARB No. 48: superseded by APB Opinion No. 16 (August 1970)
            --> APB Opinion No. 16:  superseded by SFAS No. 141 (June 2001)

     No. 49: Earnings per Share (April 1958)
            --> ARB No. 49: superseded by APB Opinion No. 9 (December 1966)
            --> APB Opinion No. 9 (Section II, EPS portion): superseded by SFAS No. 128 (February 1997)

     No. 50: Contingencies (October 1958)
            --> ARB No. 50: superseded by SFAS No. 5 (March 1975)

     No. 51: Consolidated Financial Statements (August 1959)








 
U.S. GAAP Codification
International Financial Reporting Standards (IFRS)
 
Accounting Topics
Inventory Valuation Methods
Depreciation Methods
Revenue Recognition Principle
Accrual Basis vs. Cash Basis Accounting
Basics of Journal Entries
Ratios for Financial Statement Analysis
Overview of Financial Statements








Copyright CPAClass.com.TM  All Rights Reserved.