12

Question 1

how do you calculate SOY digits?

Answer 1

SOY digits = n(n+1)/2

• DE = base cost *(remaining life/SOY digits)
• remember the numerator is REMAINING Life (3rd year DE for 10Y SOY is 8)

Question 2

how do you calculate DE w/ DDB method?

Answer 2

2/n = depreciation %

BV - AD = CV, then multiply that by same %

Question 3

which method of depreciation generally results in a loss? a gain?

Answer 3

SL = loss, gain = DDB or SOY (both rapid dep)

Question 4

how do you get per unit depletion amount?

Answer 4

total cost of mine (PP+prep cost + restoration cost -anti’d sales at end of life) / est tons = per unit depletion

Question 5

can depreciable assets be depreciated under SV?

Answer 5

no method allows this

Question 6

how do you perform component depreciation? (IFRS requires)

Answer 6

sum of FA (PP -component 1 - component 2) = amt / FA UL = DE

• comp 1 = amt / comp 1 UL = DE
• comp 2 = amt / comp 2 UL = DE

** add all DE to get DE for CY

Question 7

how do you calculate depreciable base? (CV)

Answer 7

cost - SV

Question 8

how do you get EB AD?

Answer 8

BB + IL + new DE = EB

Question 9

how do you calculate composite life?

Answer 9

total depreciable cost / total annual depreciation

Question 10

what happens when you forget to include SV in depreciation calculations?

Answer 10

NI is U/S because DE is O/S. does not affect DDB method

Question 11

what factor must be present to use the UOP (activity) method of dep?

Answer 11

total units to be produced can be est’d

Question 12

what are the acceptable methods to report TI?

Answer 12

cash, accrual, and hybrid method are all acceptable

Question 13

when does an exchange have commercial substance?

Answer 13

when FCF’s change or the economic position of 2 parties change (FV approach used) = recog. G/L

Question 14

when the company have commercial substance, how do you recognize G/L?

Answer 14

FV asset given up- BV asset given up

*BV = cost - AD

Question 15

how do you record G/L in a nonmonetary transaction?

Answer 15

• when boot is rec’d w/ less than 25% of the total consideration, a proportional amount of gain is recog’d (use BV approach for JE)
• when boot is rec’d 25%+ of consideration, recognize the gain (use FV approach)
• losses in nonmonetary exchanges are always recog’d immediately (rule of conservatism)

Question 16

under IFRS, how are G/L recog’d in nonmonetary transactions?

Answer 16

G/L is recognized immediately if the exchange generates revenue (cash)

Question 17

JE for cash paid 25%+ consideration?

Answer 17

truck B   13
 AD        8
           cash   10
       truck A    10
              gain   1

Question 18

how do you calculate G/L on involuntary conversions?

Answer 18

recognize G/L immediately:

SP of condemned property - CV = G/L on involuntary conversion

Question 19

how do you recognize G/L on involuntary conversion for destroyed fire buildings?

Answer 19

BV B + removal and cleanup = total fire loss

Question 20

what is the carrying amount of replacement property in regards to involuntary conversions?

Answer 20

the CV of replacement = FV of consideration paid for it