07-22-14 Cards

Question 1

Modifying items on the cash flow statement based on definite criteria

Answer 1

NOT A SPECIAL PURPOSE FRAMEWORK

Question 2

Capital lease - how determine useful life for depreciation?

Answer 2

75/90 - lease life
TOBPO - asset life
Under a capital lease, the lease is depreciated using the life of the lease if the 75% or 90% of fair market value criteria are met. If the lease transfers ownership or has a bargain purchase, the life of the asset is used to determine depreciation

Question 3

AFS - decline below amortized cost and permanent in nature

Answer 3

Earnings section of the income statement and writing down the cost basis to FMV

Available-for-sale securities are recognized on the balance sheet at fair value. Any related unrealized holding gains and losses are excluded from net income and reported as other comprehensive income. However, if a decline in value is not temporary, the cost basis of the individual security should be written down to fair value and the amount of the write-down is included in earnings.

Question 4

Leases

Answer 4

Leasehold improvements are capitalized and amortized (as any fixed asset) over the lesser of the useful life of the improvement or the remaining lease term

Question 5

Change from Cost Method to Equity Method

Answer 5

Neither a Change in Accounting Principle Nor Accounting Error
But Receives Retrospective Treatment

The change in investment necessitating the use of the equity method of accounting for the investment is neither a change in accounting nor an accounting error.

Question 6

Change from cash basis to accrual basis

Answer 6

Correction of an error

Change from Non-GAAP to GAAP

Question 7

Change in Reporting

Error correction

Answer 7

Retrospective application

Restatement - Prior Periods Adjusted