3 Flashcards
cash
90 days or less
DIT
not recorded by bank but before cutoff
O/S
money going out that bank hasn’t received
service charge
deducted by the bank
sales returns
does not affect AR/Inv/COGS
direct write off
-not GAAP
-AR is overstated
Dr BDE
Cr AR
allowance method
% of sales (IS approach)
% of AR (BS approach)
Aging of AR (BS approach)
% of sales
Dr BDE
Cr AFDA
% of AR
use information to solve for ENDING BALANCE & then plug in to find the information
Aging of AR
schedule w # of days/mo outstanding x %
record w/o: Dr AFDA (dec) Cr AR (dec)
Adjustment:
Dr AFDA
Cr BDE
Factoring
w/o recourse (factor assumes risk)
w/ recourse (factor has option to resell)
Rising $
FIFO has high End Inv & NI. Low COGS
LIFO has low End Inv & NI. High COGS
Property
all costs incurred up to excavation
no depreciation
equipment
capitalize: additions, improvements/replacements, extraordinary repairs
expense: ordinary repairs
capitalize
direct materials/labor, repairs/maintenance that add value, overhead, construction interest
capitalize interest
not amount borrowed,
weighted avg = avoidable interest
total interest = interest on construction debt + other borrowings
only capitalize interest on $ spent
take lower of: act interest incurred, avoidable interest
machine
capitalize any cost incurred to acquire/make ready a plant asset
leasehold improvement
use the lesser of life
valuation
cost and revaluation method
cost (like GAAP)
=NBV = cost - acc dep - impair
revaluation
= FV - acc dep - impair
initial loss goes to IS (If not initial loss, then reverse to previous gain)
initial gain (If subsequent gain, some gain go to IS the extent it reversed a previous revaluation loss)
component depreciation
separate (IFRS requires)
exchange w commercial sub (FCF change)
gain or loss recognized
difference between FV old - BV old
exchange lacking commercial sub
gain:
No boot received = no gain
Boot is paid = no gain ( <25% rule)
Boot is received = proportional gain ( <25% rule)
Boot is received = gain ( <25% rule)
(boot / total consideration) x gain = gain recog
intangibles
IFRS - research = expense/ development = cap
intangibles are capitalized at cost
cash @ FV
PV of liar
FV of stock
amortization
finite life = use shorter of est. life or remaining legal life
legal fees
if successful = cap
start up cost
expensed
R and D
expense
- material/equip/facilities w alt future use are capitalized
- taken on behalf of others is capitalized
software development
expense (Idea) -planning, design -before tech feas. established capitalize (upgrade/enhancements) - coding, testing -after tech feas established
impairment
annually test or with major event change
finite life (2 step)
1) recoverability (If fail go to step 2)
= undisc CF - CV
2) impair loss
= FV - CV
indefinite life (1 step)
1) impair loss
= FV - CV
IFRS impair
CV- (greater of FV - cost to sell or PVFCF)
restoration
prohibited under GAAP unless asset held for disposal
reversal
prohibited under GAAp unless intangible asset is held for sale
