ch02 kieso中级会计学英文课件概要1.pptVIP

Historical Cost – the price, established by the exchange transaction, is the “cost”. Issues: Historical cost provides a reliable benchmark for measuring historical trends. Fair value information may be more useful. FASB issued SFAS 15X, “Fair Value Measurements (2005).” Reporting of fair value information is increasing. Third Level: Principles LO 7 Explain the application of the basic principles of accounting. Revenue Recognition - generally occurs (1) when realized or realizable and (2) when earned. Exceptions: During Production. At End of Production Upon Receipt of Cash Third Level: Principles LO 7 Explain the application of the basic principles of accounting. Matching - efforts (expenses) should be matched with accomplishment (revenues) whenever it is reasonable and practicable to do so. “Let the expense follow the revenues.” Third Level: Principles LO 7 Explain the application of the basic principles of accounting. Illustration 2-4 Expense Recognition Full Disclosure – providing information that is of sufficient importance to influence the judgment and decisions of an informed user. Provided through: Financial Statements Notes to the Financial Statements Supplementary information Third Level: Principles LO 7 Explain the application of the basic principles of accounting. Third Level: Principles LO 7 Explain the application of the basic principles of accounting. Brief Exercise 2-5 Identify which basic principle of accounting is best described in each item below. (a) Norfolk Southern Corporation reports revenue in its income statement when it is earned instead of when the cash is collected. (b) Yahoo, Inc. recognizes depreciation expense for a machine over the 2-year period during which that machine helps the company earn revenue. (c) Oracle Corporation reports information about pending lawsuits in the notes to its financial statements. (d) Eastman Kodak Company reports land on its balance sheet at the amount paid to acquire it, even though the estimat