Finance and Accounting
The FASB Codification:
Introduction and Search
Strategies
Chapter
Jeremy has just been asked to research an issue related to his company’s “volatility”
assumption, one of the variables used to estimate the fair value of his company’s outstand-
ing stock compensation awards. Jeremy is a staff accountant, with only a limited under-
standing of stock compensation accounting. He doesn’t feel very competent in this area.
Nevertheless, Jeremy gets right to work. First, he asks his supervisor for more back-
ground on the issue then reviews a memo describing how the company has estimated
this assumption in the past. Next, Jeremy logs on to the FASB Accounting Standards
Codification (the “Codification”) and begins reading more about this assumption within the
stock compensation topic. Before long, he has a basic understanding of the requirements
for estimating volatility, and he is pleased to have learned something new in the process
of researching this issue.
Objectives
Learning
After reading this chapter and performing the exercises herein, you will be able to
1. Describe the purpose of the Codification, and the meaning of authoritative.
2. Identify standard setters that have contributed to the current body of authoritative
guidance.
3. Understand the organization of guidance within the Codification.
4. Perform effective Browse searches within the Codification, reviewing all areas of
required reading.
5. Search the Codification using other methods, including the keyword search feature,
the Master Glossary, and the Cross Reference feature.
6. Differentiate between existing versus pending content, and understand how to inter-
pret transition date guidance.
7. Recognize accounting alternative guidance available for private companies.
