ASC

ASC 105-10

Overall

105 Generally Accepted Accounting Principles

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In brief

IntroductorySEC guidanceTransition and effective datesFinancial statement presentation

ASC 105-10 establishes the FASB Accounting Standards Codification as the single source of authoritative U.S. GAAP for nongovernmental entities, with SEC rules and interpretive releases (plus SABs and staff announcements) also authoritative for SEC registrants. Everything not in the Codification (other than grandfathered guidance) is nonauthoritative. When no authoritative guidance addresses a transaction, an entity looks first by analogy to authoritative guidance for similar transactions (unless analogy is prohibited) and only then to nonauthoritative sources such as Concepts Statements, IFRS, and prevalent industry practice.

Key points (7)
  • The Codification is the source of authoritative GAAP recognized by the FASB for nongovernmental entities; SEC rules and interpretive releases are also authoritative for SEC registrants (105-10-05-1, 105-10-10-1).
  • If no authoritative GAAP addresses a transaction, an entity shall first consider guidance for similar transactions within authoritative GAAP, then nonauthoritative sources; analogy is prohibited where the guidance says it may not be applied by analogy (105-10-05-2).
  • Nonauthoritative sources include prevalent practice, FASB Concepts Statements, AICPA Issues Papers, IFRS, pronouncements of professional associations or regulators, TPAs, and textbooks; their weight depends on relevance, specificity, authority of the author, and use in practice (105-10-05-3).
  • SEC Sections (an 'S' before the section number) are included for convenience only, relate solely to SEC registrants, are incomplete, and do not replace or affect SEC or staff guidance (105-10-05-4, 105-10-15-2).
  • Accounting Standards Updates are not authoritative in their own right; they only amend the Codification and supply background and basis for conclusions, and all nongrandfathered non-SEC guidance outside the Codification is superseded (105-10-05-5).
  • The Codification need not be applied to immaterial items (105-10-05-6).
  • Certain superseded standards remain authoritative as grandfathered guidance for ongoing transactions (e.g., poolings of interests, pension transition assets/obligations, pre-Statement 114 troubled debt restructurings) (105-10-70-2).

For students. This is the "rules about the rules" topic — exams love the two-step hierarchy (authoritative Codification, then analogy, then nonauthoritative sources). The classic misunderstanding is thinking FASB Concepts Statements or an ASU itself are authoritative GAAP; they are not, and analogy is off-limits where the guidance expressly forbids it.

authoritative gaapgaap hierarchycodificationnonauthoritative guidanceanalogy to similar transactionssec sectionsgrandfathered guidancemateriality

Machine-generated study aid for ASC 105-10. Check the source paragraphs below.

105-10-00Status

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105-10-05Overview and Background

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105-10-05-1
This Topic establishes the Financial Accounting Standards Board (FASB) Accounting Standards Codification® (Codification) as the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. In addition to the SEC's rules and interpretive releases, the SEC staff issues Staff Accounting Bulletins that represent practices followed by the staff in administering SEC disclosure requirements, and it utilizes SEC Staff Announcements and Observer comments made at Emerging Issues Task Force meetings to publicly announce its views on certain accounting issues for SEC registrants.
105-10-05-2
If the guidance for a transaction or event is not specified within a source of authoritative GAAP for that entity, an entity shall first consider accounting principles for similar transactions or events within a source of authoritative GAAP for that entity and then consider nonauthoritative guidance from other sources. An entity shall not follow the accounting treatment specified in accounting guidance for similar transactions or events in cases in which those accounting principles either prohibit the application of the accounting treatment to the particular transaction or event or indicate that the accounting treatment should not be applied by analogy.
105-10-05-3
Accounting and financial reporting practices not included in the Codification are nonauthoritative. Sources of nonauthoritative accounting guidance and literature include, for example, the following:
  1. a
    Practices that are widely recognized and prevalent either generally or in the industry
  2. b
    FASB Concepts Statements
  3. c
    American Institute of Certified Public Accountants (AICPA) Issues Papers
  4. d
    International Financial Reporting Standards of the International Accounting Standards Board
  5. e
    Pronouncements of professional associations or regulatory agencies
  6. f
    Technical Information Service Inquiries and Replies included in AICPA Technical Practice Aids
  7. g
    Accounting textbooks, handbooks, and articles.
The appropriateness of other sources of accounting guidance depends on its relevance to particular circumstances, the specificity of the guidance, the general recognition of the issuer or author as an authority, and the extent of its use in practice.
105-10-05-4
The Codification contains the authoritative standards that are applicable to both public nongovernmental entities and nonpublic nongovernmental entities. Content contained in the SEC Sections (designated by an “S” preceding the Section number) is provided for convenience and relates only to SEC registrants. The SEC Sections do not contain the entire population of SEC rules, regulations, interpretive releases, and staff guidance. Content in the SEC Sections is expected to change over time, and there may be delays between SEC and staff changes to guidance and Accounting Standards Updates. The Codification does not replace or affect guidance issued by the SEC or its staff for public entities in their filings with the SEC.
105-10-05-5
The FASB does not consider Accounting Standards Updates as authoritative in their own right. Instead, new Accounting Standards Updates serve only to update the Codification, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the Codification. All nongrandfathered non-SEC accounting guidance not included in the Codification is superseded and deemed nonauthoritative.
105-10-05-6
The provisions of the Codification need not be applied to immaterial items.

105-10-10Objectives

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105-10-10-1
The objective of this Topic is to establish the Financial Accounting Standards Board (FASB) Accounting Standards Codification® as the source of authoritative principles and standards recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.
105-10-10-2
This Topic also identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP in the United States (the GAAP hierarchy).

105-10-15Scope and Scope Exceptions

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Entities

105-10-15-1
The Financial Accounting Standards Board (FASB) Accounting Standards Codification® applies to financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP).
105-10-15-2
Content in the Securities and Exchange Commission (SEC) Sections of the Codification is provided for convenience and relates only to financial statements of SEC registrants that are presented in conformity with GAAP.

105-10-65Transition and Open Effective Date Information

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105-10-65-1
Paragraph superseded on 11/07/2012 after the end of the transition period stated in FASB Statement No. 168, The FASB Accounting Standards Codification®and the Hierarchy of Generally Accepted Accounting Principles.
105-10-65-2
Paragraph superseded on 06/26/2015 after the end of the transition period stated in Accounting Standards Update No. 2012-04, Technical Corrections and Improvements.
105-10-65-3
Paragraph superseded on 07/05/2017 after the end of the transition period stated in Accounting Standards Update No. 2015-10, Technical Corrections and Improvements.
105-10-65-4
Paragraph superseded on 08/19/2021 after the end of the transition period stated in Accounting Standards Update No. 2018-09, Codification Improvements.
105-10-65-5
Paragraph superseded on 08/19/2021 after the end of the transition period stated in Accounting Standards Update No. 2018-09, Codification Improvements.
105-10-65-6
Paragraph superseded on 07/10/2023 after the end of the transition period stated in Accounting Standards Update No. 2020-10, Codification Improvements.

Transition Related to Accounting Standards Update No. 2023-06, <em class="ph i">Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative</em>

105-10-65-7
Accounting Standards Update 2023-06
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
The following represents the transition and effective date information related to Accounting Standards Update No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative:
  1. a
    For all entities subject to the Securities and Exchange Commission’s (SEC) existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, each amendment in the pending content that links to this paragraph shall become effective on the date that the SEC’s removal of the related guidance from Regulation S-X or Regulation S-K becomes effective. An entity shall apply the pending content that links to this paragraph to financial statements issued after the effective date. Early adoption is prohibited. Paragraph 105-10-65-8 includes a cross-reference to Regulation S-X and Regulation S-K for the pending content that links to this paragraph.
  2. b
    For all other entities, each amendment in the pending content that links to this paragraph shall be effective two years after the pending content becomes effective for entities referred to in paragraph 105-10-65-7(a).
  3. c
    The pending content that links to any related requirements not removed by the SEC from Regulation S-X or Regulation S-K by June 30, 2027, will be removed from the Codification and will not become effective for any entity.
  4. d
    An entity shall apply the pending content that links to this paragraph prospectively to financial statements issued after the effective date.
105-10-65-8
Accounting Standards Update 2023-06
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
2027-06-30
The following represents a cross-reference to Regulation S-X or Regulation S-K for the pending content that links to paragraph 105-10-65-7:
SEC RuleCodification Paragraph
Regulation S-K Item 302(b)
932-235-50-2A
Regulation S-X Rule 10-01(b)(2)
260-10-50-1
260-10-55-51 through 55-52
Regulation S-X Rule 10-01(b)(7)
250-10-50-6
270-10-45-12
270-10-45-19
270-10-50-1
Regulation S-X Rule 3-15(c)
974-10-50-1
Regulation S-X Rule 4-08(b)
440-10-50-1
Regulation S-X Rule 4-08(d)
505-10-50-4
Regulation S-X Rule 4-08(m)
860-30-15-1
860-30-45-2 through 45-3
860-30-50-7
860-30-50-9 through 50-12
860-30-55-4
Regulation S-X Rule 4-08(n)
230-10-50-9
815-10-50-8C
Regulation S-X Rule 5-02.19(b)
470-10-15-1
470-10-50-6 through 50-7
Regulation S-X Rule 6-04.17
946-20-50-11

Transition Related to Accounting Standards Update No. 2024-02, <em class="ph i">Codification Improvements—Amendments to Remove References to the Concepts Statements</em>

105-10-65-9
Accounting Standards Update 2024-02
2027-06-14
2024-12-16
2024-12-16
2024-12-16
2024-12-16
2025-12-16
2025-12-16
2025-12-16
2025-12-16
2025-12-16
2025-12-16
2025-12-16
2025-12-16
2025-12-16
2025-12-16
The following represents the transition and effective date information related to Accounting Standards Update No. 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements:
  1. a
    For public business entities, the pending content that links to this paragraph shall be effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years.
  2. b
    For all other entities, the pending content that links to this paragraph shall be effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years.
  3. c
    Early application of the pending content that links to this paragraph is permitted for any fiscal year or interim period for which the entity’s financial statements have not yet been issued (or made available for issuance). If an entity adopts the pending content that links to this paragraph in an interim period, it must adopt that pending content as of the beginning of the fiscal year that includes that interim period.
  4. d
    An entity shall apply the pending content that links to this paragraph using one of the following transition methods:
    1. 1
      Prospectively to all new or modified transactions recognized on or after the date that the entity first applies the pending content that links to this paragraph
    2. 2
      Retrospectively to the beginning of the earliest comparative period presented in which the pending content that links to this paragraph was first applied. An entity shall adjust the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) as of the beginning of the earliest comparative period presented.
  5. e
    An entity applying the pending content that links to this paragraph retrospectively in accordance with (d)(2) shall provide the transition disclosures required by paragraphs
    250-10-50-1 through 50-3
    .

Transition Related to Accounting Standards Update No. 2025-12, <em class="ph i">Codification Improvements</em>

105-10-65-10
Accounting Standards Update 2025-12
2028-06-13
2026-12-16
2026-12-16
2026-12-16
2026-12-16
2026-12-16
2026-12-16
2026-12-16
2026-12-16
2026-12-16
2026-12-16
2026-12-16
2026-12-16
2026-12-16
2026-12-16
The following represents the transition and effective date information related to Accounting Standards Update No. 2025-12, Codification Improvements (except for entities applying the amendments to Topic 260 on earnings per share, for which transition guidance is provided in paragraph 260-10-65-5):
Effective date and early adoption
  1. a
    All entities shall apply the pending content that links to this paragraph for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods.
  2. b
    Early adoption of the pending content that links to this paragraph is permitted in any interim or annual reporting period in which financial statements have not yet been issued or made available for issuance (also see (f) about transition elections). If an entity adopts the pending content that links to this paragraph in an interim reporting period, it shall adopt the pending content as of the beginning of the annual reporting period that includes that interim reporting period.
Transition methods
  1. c
    An entity shall apply the pending content that links to this paragraph using one of the following transition methods (also see (f) about transition elections):
    1. 1
      Prospectively to all transactions recognized on or after the date that the pending content that links to this paragraph is adopted.
    2. 2
      Retrospectively to the beginning of the earliest comparative period presented in which the pending content that links to this paragraph was first applied. An entity shall adjust the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) as of the beginning of the earliest comparative period presented.
Transition disclosures
  1. d
    An entity that applies the pending content that links to this paragraph prospectively in accordance with (c)(1) shall provide the transition disclosures required by paragraph 250-10-50-1(a) in both the interim reporting period (if applicable) and the annual reporting period of the change.
  2. e
    An entity that applies the pending content that links to this paragraph retrospectively in accordance with (c)(2) shall provide the transition disclosures required by paragraph 250-10-50-1(a) through (b)(1), (b)(2) for any prior periods retrospectively adjusted, (b)(3), and (c)(2) in both the interim reporting period (if applicable) and the annual reporting period of the change.
Transition elections
  1. f
    In electing to early adopt the pending content that links to this paragraph in accordance with (b) and electing a transition method to apply the pending content that links to this paragraph in accordance with (c), an entity may make those elections individually for each of the following:
    1. 1
      Amendments to the Master Glossary to remove the term Amortized Cost
    2. 2
      Amendments to Subtopic 205-10 in paragraph 205-10-45-2
    3. 3
      Amendments to Subtopic 220-10 in paragraph 220-10-55-7
    4. 4
      Amendments to Subtopic 310-10 in paragraph 310-10-50-40
    5. 5
      Amendments to Subtopic 325-40 in paragraphs 325-40-35-1,
      325-40-35-4 through 35-4B
      , and 325-40-35-10
    6. 6
      Amendments to Subtopic 326-20 in paragraphs 326-20-30-4A, 326-20-35-8A, and 326-20-45-5
    7. 7
      Amendments to Subtopic 360-10 in paragraph 360-10-40-2
    8. 8
      Amendments to Subtopic 410-30 in paragraph 410-30-25-17
    9. 9
      Amendments to Subtopic 505-30 in paragraph 505-30-30-8
    10. 10
      Amendments to Subtopic 606-10 in paragraph 606-10-55-404
    11. 11
      Amendments to Subtopic 740-10 in paragraph 740-10-55-38
    12. 12
      Amendments to Subtopic 815-40 in paragraph 815-40-55-5
    13. 13
      Amendments to Subtopic 820-10 in paragraph 820-10-55-53
    14. 14
      Amendments to Subtopic 825-10 in paragraph 825-10-15-7
    15. 15
      Amendments to Subtopic 825-10 in paragraph 825-10-25-4
    16. 16
      Amendments to Subtopic 852-10 in paragraph 852-10-55-3
    17. 17
      Amendments to Subtopic 852-10 in paragraphs
      852-10-55-9 through 55-11
    18. 18
      Amendments to Subtopic 860-10 in paragraph 860-10-55-3
    19. 19
      Amendments to Subtopic 860-10 in paragraphs 860-10-55-5 and 860-10-55-14A
    20. 20
      Amendments to Subtopic 860-10 in paragraph 860-10-55-42B
    21. 21
      Amendments to Subtopic 944-360 in paragraph 944-360-45-5
    22. 22
      Amendments to Subtopic 954-810 in paragraph 954-810-15-3
    23. 23
      Amendments to Subtopics 954-220 and 958-220 in paragraphs 954-220-45-6 and 958-220-45-9
    24. 24
      Amendments to Subtopic 958-310 in paragraph 958-310-35-3
    25. 25
      Amendments to Subtopic 958-325 in paragraph 958-325-35-1
    26. 26
      Amendments to Subtopic 958-325 in paragraphs 958-325-35-5, 958-325-35-7, and 958-325-60-2
    27. 27
      Amendments to Subtopics 958-360 and 958-605 in paragraphs 958-360-50-4 and 958-605-55-25
    28. 28
      Amendments to Subtopic 958-805 in paragraph 958-805-25-21
    29. 29
      Amendments to Subtopic 958-805 in paragraph 958-805-30-5
    30. 30
      Amendments to Subtopic 958-815 in paragraphs 958-815-05-1 and
      958-815-25-1 through 25-2
    31. 31
      Amendments to Subtopic 962-325 in paragraph 962-325-55-17
    32. 32
      Amendments to Subtopic 970-323 in paragraph 970-323-05-4.

105-10-70Grandfathered Guidance

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105-10-70-1
Financial Accounting Standards Board (FASB) Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles, contained a description of the categories of the generally accepted accounting principles (GAAP) hierarchy that existed before the Codification. An entity that has followed, and continues to follow, an accounting treatment that was previously in category (c) or category (d) of that GAAP hierarchy as of March 15, 1992, need not change to an accounting treatment in a higher category ((b) or (c)) of that hierarchy if its effective date was before March 15, 1992. For example, a nongovernmental entity that followed a prevalent industry practice (category (d)) as of March 15, 1992, does not have to change to an accounting treatment included in a standard in category (b) or category (c) (such as an accounting principle in a cleared American Institute of Certified Public Accountants [AICPA] Statement of Position or Accounting Standards Executive Committee Practice Bulletin) whose effective date is before March 15, 1992. For standards whose effective date is after March 15, 1992, and for entities initially applying an accounting principle after March 15, 1992 (except for Emerging Issues Task Force consensus positions issued before March 16, 1992, which become effective in the hierarchy for initial application of an accounting principle after March 15, 1993), an entity shall follow guidance in the Codification.
105-10-70-2
Certain accounting standards have allowed for the continued application of superseded accounting standards for transactions that have an ongoing effect in an entity's financial statements. That superseded guidance has not been included in the Codification, shall be considered grandfathered, and shall continue to remain authoritative for those transactions after the effective date of FASB Statement No. 168, The FASB Accounting Standards Codification® and the Hierarchy of Generally Accepted Accounting Principles. While not comprehensive, the following are examples of such grandfathered items:
  1. a
    Pooling of interests in a business combination (originally addressed by APB Opinion No. 16, Business Combinations) described in paragraph B217 of FASB Statement No. 141, Business Combinations
  2. b
    Pension transition assets or obligations described in paragraph 77 of FASB Statement No. 87, Employers' Accounting for Pensions
  3. c
    Employee stock ownership plan shares (originally addressed by AICPA Statement of Position 76-3, Accounting Practices for Certain Employee Stock Ownership Plans) purchased by, and held as of, December 31, 1992, as described in paragraphs 97 and 102 of AICPA Statement of Position 93-6, Employers' Accounting for Employee Stock Ownership Plans
  4. d
    Loans restructured in a troubled debt restructuring before the effective date of FASB Statement No. 114, Accounting by Creditors for Impairment of a Loan, described in paragraph 24 of FASB Statement No. 118, Accounting by Creditors for Impairment of a Loan—Income Recognition and Disclosures
  5. e
    Stock compensation for nonpublic and other entities (originally addressed by FASB Statement No. 123, Accounting for Stock-Based Compensation, or APB Opinion No. 25, Accounting for Stock Issued to Employees) described in paragraph 83 of FASB Statement No. 123 (revised 2004), Share-Based Payment
  6. f
    For nonpublic entities electing the deferral of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, FASB Statement No. 109, Accounting for Income Taxes, and related standards
  7. g
    For business combinations with an acquisition date before the first annual reporting period beginning on or after December 15, 2008, Statement 141 and any other relevant standards
  8. h
    For a combination of a not-for-profit entity with one or more other not-for-profit entities, businesses, or nonprofit activities, Opinion 16, if the combination occurred before the effective dates of FASB Statement No. 164, Not-for-Profit Entities: Mergers and Acquisitions.
  9. i
    Subparagraph superseded by Accounting Standards Update No. 2010-07.

Related subtopics