📖 Overview
ASC 105 establishes the hierarchy of generally accepted accounting principles (GAAP) for nongovernmental entities. It identifies the sources of accounting principles and the framework for selecting accounting policies when no standard specifically applies.
🎯 Scope
Applies to all nongovernmental entities that prepare financial statements in accordance with GAAP. Covers the GAAP hierarchy, including SEC guidance, FASB standards, AICPA literature, and other accounting guidance.
⚙️ Key Principles
1. GAAP Hierarchy: Level 1 (FASB ASC, SEC rules), Level 2 (FASB technical bulletins, AICPA industry guides), Level 3 (FASB concept statements, AICPA practice bulletins), Level 4 (other accounting literature).
2. Consistency: Accounting policies should be applied consistently from period to period.
3. Materiality: GAAP applies to material items; immaterial items may be treated differently.
4. Going Concern: Financial statements assume the entity will continue operating.
📏 Measurement
Not a measurement standard itself; refers to other ASC topics for measurement of specific transactions. General measurement principles include historical cost, fair value, net realizable value, and present value.
✅ Recognition
Recognition criteria are specified by individual ASC topics. General recognition requires that an item meets the definition of an element (asset, liability, revenue, expense) and can be reliably measured.
📊 Presentation
Not a presentation standard; refers to ASC 205 (Presentation of Financial Statements) and other presentation topics.
📝 Disclosure Requirements
Disclose the accounting policies selected and the basis of preparation. When no standard applies, disclose the hierarchy level used and the judgment applied.
🔗 Related Standards
ASC 205 (Presentation of Financial Statements), ASC 310 (Receivables), ASC 606 (Revenue), ASC 740 (Income Taxes)