Final answer:
To determine the applicability of a Subtopic in the ASC, consider your informational needs, find credible evidence, use sound reasoning, and verify logical consistency. Apply these steps and check if the resulting interpretation is reasonable to ensure accurate application of the ASC guidance.
Step-by-step explanation:
To determine whether the guidance in a Subtopic of the Accounting Standards Codification (ASC) does or does not apply to the situation under consideration, you should first consider what you want to know about the topic. Next, find credible information about the topic and ensure your understanding is based on sound reasoning and evidence. After gathering the facts, use your prior knowledge and common sense to interpret the standards, but be sure not to ignore the facts in favor of personal opinions. When unsure, follow the guidance given by the ASC and verify the signs of potential changes for each element by reviewing resources such as figures, tables, and text material provided. Finally, check to see if the answer is reasonable: does it make sense given the type of situation you're dealing with? If you find the guidance does not seem to apply, or if you're having trouble answering the questions with confidence, it may be necessary to revisit the topic sentence and potentially revise your understanding of the ASC subtopic.