3.

Question 1

Effective interest method to calculate interest payment of bonds:

Answer 1

Face value “X” the stated interest rate (or coupon rate).

Question 2

Effective interest method to calculate interest expense of bonds

Answer 2

Effective interest rate “X” carrying amount of the bonds (carrying amount of bond definition: the net amount between the bond’s face value plus any un-amortized premiums or minus any amortized discounts)

Question 3

Effective interest method to calculate bond discount

Answer 3

Interest Paid (Bond Face Amount X Stated Rate)

Less:

Interest expense (Bond Carrying amount X Stated Rate)

= Amortization change.

Amortization change

Less: Unamortized Discount

Unamortized discount times Carrying amount

Question 4

Journal Entries for effective interest method for bonds:

Answer 4

See OneNote, note 1.

Question 5

Effective interest method to calculate the payment due on call date:

Answer 5

Issue price of the bonds (of Face Value) “X” call price

Question 6

Total Net Periodic Pension Cost Formula:

Answer 6

“SIRAGE”
Service cost
Interest cost

Amortization of prior service cost

Amortization of transition asset
Existing Net Asset or net obligation

Question 7

Formula to calculate net periodic pension cost (under US GAAP)

Answer 7

Unrecognized gain or loss
<10% of the greater of the PBO or FMV of plan assets at the beginning of the year
=Excess
"/" Avg remaining service life
=Minimum recognized amount

Question 8

BASE formula to calulate return on plan assets

Answer 8

Beginning balance
Add: contributions & investment return
Subtract: Benefits paid
=Ending balance

Question 9

How should “unusual in nature” damages be reported on the income statement:

Answer 9

Separately as a component of income from continuing operations.

Question 10

IFRS Goodwill impairment test

Answer 10

Carrying value of cash generating unit - CGU’s recoverable amount (Recoverable amount definition: FV less cost to sell).

Question 11

Capitalized costs of a patent include the following:

Answer 11

Purchase price, VAT, and legal costs to register the patent.

Question 12

Capitalization of computer software costs can be capitalized when?:

Answer 12

After technological feasibility is established. For example: coding and testing costs can be capitalized after technological feasibility are established.

Question 13

The effective tax rates for operations for the full year should reflect:

Answer 13

Anticipated foreign tax planning alternatives. In addition the effect of other anticipated tax credits, capital gains rates, and foreign tax credits should be included.

Question 14

Under FASB and IASB, relevance is a fundamental:

Answer 14

qualitative characteristic, and materiality is a component of relevance.

Question 15

A component that is held for sale is valued at:

Answer 15

the lower of BV of NRV

Question 16

What is the journal entry process when repurchasing stock? (Par value method)

Answer 16

First Debit Treasury stock to the extent of the price of the stock (for example: 5 par stock was repurchased for $12. Then the first entry would be the amount of shares repurchased for par in TS). Then debit APIC - Stock (either common of preferred) to the extent that the repurchase price exceeded the par value. (in the case that there was a $5 par stock repurchased for 12, the APIC - Stock would be debited for the difference between the $5 par and the issuance price $8 = $3), Any excess over issuance price is debited to RE.

Question 17

What is the journal entry process when repurchasing stock? (Cost method)

Answer 17

When repurchasing stock under the cost method, you would just debit the repurchase (cost) price to TS. If you were to re-sell the TS, you would debit the sale price to cash, credit the TS original repurchase price, then you would would plug the difference to APIC (if available per previous JE’s) or RE.

Question 18

What amounts should be reported in accumulated OCI related to the pension plans on BAlance Sheets:

Answer 18

Remeasurements of the defined benefit liability, including remeasurements from actuarial gains, are reported in other comprehensive income and are not reclassified to the income statement.

Question 19

How should discounted notes proceeds be recorded:

Answer 19

At the maturity value less the discount applied.