ASC 215: Statement of Shareholder Equity
In this blog post, we’ll be discussing ASC 215, which is one of the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC). This chapter introduces ASC 215, the standard for Statement of Shareholder Equity, and it contains one subtopic ASC 215-10. We’ll go over what ASC 215-10 covers, and why it’s important for statement preparation.
What is GAAP?
GAAP is a common set of accounting principles, standards, and procedures. Public companies in the United States must follow GAAP when they compile their financial statements. To that end, the Financial Accounting Standards Board (FASB) maintains GAAP. The board issues new rules as necessary to ensure that GAAP remains up-to-date.
Where Can I Research GAAP?
FASB provides free online access to the Accounting Standards Codification, which is the only authoritative source for US GAAP. FASB and the AICPA also provide access to other authoritative literature that supplements the GAAP Hierarchy.
To access the Accounting Standards Codification, visit asc.fasb.org. Anyone can access the codes using a basic account. For more advanced features you can set up a professional account. If you work at a company subject to GAAP rules, your company likely has a professional account.
What is ASC 215?
ASC 215 is a set of guidelines that public companies in the United States must follow when compiling their financial statements. The guidelines cover the basics of the statement of shareholder equity. The statement of shareholder equity is a financial statement that shows the changes in a company’s equity during a period of time. ASC 215 has only one subchapter.
ASC 210-10: Overall
This section refers users to ASC 505 which is the section on equity. Disclosures of changes in equity have been moved to this section for ease of use.
Why Does It Matter?
The presentation and disclosure of financial statements can have a major impact on the decisions made by users of those statements. For example, if a company or individual is considering investing in another company, the investor will want to know whether that company is a going concern.
ASC 215 follows the framework set by ASC 205 and requires companies to adequately disclose changes in shareholder equity. To that end, companies can’t aggregate balances at too high a level. The more complex your business, the more disclosures the codes require.
This section ensures that investors have enough information to make informed decisions and that companies cant mask their performance.
Let’s Recap
In short, ASC 215 is a set of guidelines that public companies in the United States must follow when compiling their financial statements. The guidelines cover the basics of shareholder equity which is a financial statement that shows the changes in a company’s equity during a period of time
ASC 215 is important because it ensures that investors have enough information to make informed decisions and that companies can’t mask their performance. Following these guidelines is crucial for public companies in the United States.
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