Select Transactions, Events, and Reporting Judgments

This part moves from account-level measurement into transactions and events that change recognition, timing, presentation, or disclosure. These chapters are especially important when a FAR question looks familiar but turns on one timing fact, one threshold, or one reporting period boundary.

In This Part

• Chapter 18: Accounting Changes and Errors covers accounting changes, estimate revisions, and correction of prior-period errors.
• Chapter 19: Contingencies and Commitments explains uncertainty, commitments, guarantees, and going-concern disclosure.
• Chapter 20: Revenue Recognition applies ASC 606 contract logic to revenue timing and presentation.
• Chapter 21: Income Tax Accounting covers current tax, deferred taxes, valuation allowances, and uncertain tax positions.
• Chapter 22: Fair Value Measurement explains valuation approaches, hierarchy levels, and disclosure effects.
• Chapter 23: Leases covers ASC 842 lease classification, measurement, sale-leasebacks, and disclosures.
• Chapter 24: Subsequent Events addresses post-period events and whether they adjust the statements or require disclosure.

How to Use This Part

• Read this part carefully if FAR misses tend to come from timing or event-classification errors.
• Focus on when recognition happens and what must be disclosed even when recognition does not change.
• Return here whenever a transaction’s accounting effect feels almost right but not fully correct.

In this section

• Accounting Changes, Estimate Revisions, and Error Corrections
  FAR coverage for accounting principle changes, estimate revisions, retrospective application, and prior-period corrections.
  • Accounting Principle Changes and Estimate Revisions
    FAR distinctions between accounting principle changes, estimate revisions, and changes that contain both elements.
  • Retrospective and Prospective Application of Accounting Changes
    FAR treatment for retrospective restatement, prospective application, and impracticability in accounting changes.
  • Error Corrections and Prior-Period Adjustments
    FAR treatment for correcting prior-period errors, retained earnings adjustments, and comparative financial statement presentation.
• Contingencies, Commitments, and Going Concern
  FAR coverage for loss contingencies, gain contingencies, commitments, guarantees, warranties, and going-concern disclosure.
  • Loss Contingencies, Gain Contingencies, and Disclosure Thresholds
    FAR recognition and disclosure thresholds for loss contingencies, gain contingencies, probability, and estimability.
  • Legal Claims, Warranties, Guarantees, and Potential Liabilities
    FAR application of contingency rules to lawsuits, guarantees, warranties, and other potential obligations.
  • Commitments, Purchase Obligations, and Lease-Related Disclosures
    FAR treatment for noncancelable purchase obligations, executory commitments, and lease-related disclosure boundaries under current GAAP.
  • Going Concern Evaluation and Disclosure Under ASC 205-40
    FAR coverage of substantial doubt, management evaluation periods, mitigating plans, and going-concern disclosures.
• Revenue Recognition Under ASC 606
  FAR coverage for the ASC 606 five-step model, principal-agent analysis, variable consideration, contract costs, licenses, and disclosure.
  • The ASC 606 Five-Step Revenue Recognition Model
    FAR coverage of contract identification, performance obligations, transaction price, allocation, and revenue recognition timing.
  • Principal-Agent Analysis and Variable Consideration
    FAR application of gross-versus-net reporting and constrained variable consideration under ASC 606.
  • Contract Costs, Licenses, and Nonrefundable Fees
    FAR treatment for incremental contract costs, licensing arrangements, and upfront nonrefundable fees under ASC 606.
  • Revenue Presentation and Disclosure Requirements
    FAR coverage for contract assets, contract liabilities, revenue disaggregation, judgments, and ASC 606 disclosure.
• Income Tax Accounting and Deferred Tax Effects
  FAR coverage for current tax expense, deferred tax assets and liabilities, valuation allowances, NOLs, intraperiod allocation, and uncertain tax positions.
  • Current Tax Expense and Deferred Tax Assets and Liabilities
    FAR calculation and presentation of current tax expense, deferred tax assets, deferred tax liabilities, and temporary differences.
  • Valuation Allowances, NOLs, and Intraperiod Tax Allocation
    FAR treatment for deferred tax asset realizability, net operating losses, valuation allowances, and intraperiod allocation.
  • Uncertain Tax Positions and Related Disclosures
    FAR coverage of recognition, measurement, more-likely-than-not thresholds, and disclosure for uncertain tax positions.
• Fair Value Measurement and Disclosure
  FAR coverage for ASC 820 fair value definition, valuation approaches, hierarchy levels, and measurement disclosures.
  • Fair Value Definition and Valuation Approaches
    FAR coverage of exit price, market participant assumptions, and market, cost, and income approaches under ASC 820.
  • Fair Value Hierarchy Levels 1, 2, and 3
    FAR distinctions between Level 1, Level 2, and Level 3 inputs and their disclosure consequences.
  • Fair Value Measurement Disclosure Requirements
    FAR coverage of recurring and nonrecurring fair value disclosures, hierarchy transfers, and significant unobservable inputs.
• Lease Classification, Measurement, and Disclosure
  FAR coverage for ASC 842 lessee accounting, lessor accounting, sale-leasebacks, lease measurement, and disclosure.
  • Lessee Accounting for Finance and Operating Leases
    FAR coverage of ASC 842 lessee classification, right-of-use assets, lease liabilities, and expense patterns.
  • Lessor Accounting for Sales-Type, Direct Financing, and Operating Leases
    FAR distinctions among sales-type, direct financing, and operating lease accounting for lessors.
  • Sale-Leaseback Transaction Accounting
    FAR treatment for sale-leaseback arrangements, failed sales, financing treatment, and gain recognition.
  • Lease Disclosure Requirements Under ASC 842
    FAR coverage of lease maturity analyses, weighted-average lease terms, discount rates, variable payments, and qualitative disclosure.
• Subsequent Events and Post-Balance-Sheet Reporting
  FAR coverage for recognized and nonrecognized subsequent events, evaluation periods, financial statement effects, and note disclosure.
  • Recognized and Nonrecognized Subsequent Events
    FAR distinction between subsequent events that adjust the statements and those that require only disclosure.
  • Subsequent Event Disclosure Periods and Reissuance Considerations
    FAR coverage of subsequent event evaluation windows, issuance dates, availability for issuance, and reissuance considerations.
  • Subsequent Event Effects on Financial Statements and Notes
    FAR treatment for deciding whether a subsequent event changes statement amounts, note disclosure, or both.