#6

Question 1

What is regulation S-K?

Answer 1

Instructions for filing for nonfinancial statement forms required by the SEC

Question 2

What is regulation S-X

Answer 2

Information regarding financial statements that must be filed to the SEC

Question 3

Income is constructively received and included in gross income if

Answer 3

it’ is readily available to the taxpayer AND actual receipt is not subject to substantial limitations or restrictions

Question 4

How do you report a change in accounting principle?

Answer 4

Adjust retained earnings. It does NOT affect income.

Question 5

What is amortization?

Answer 5

Allocation of cost over time

Question 6

Should research and development cost be capitalized?

Answer 6

NO. It should be expensed

Question 7

When is goodwill incurred?

Answer 7

Only when it’s from purchase of another entity. Cost from maintaining and developing goodwill are expensed

Question 8

When you calculate the company’s income, how does the owner’s investment and withdrawing of investment affect it?

Answer 8

It does NOT affect it. Owner’s investment and withdrawl of it falls in stockholder’s equity.

Question 9

What does research and development include?

Answer 9

costs include prior to technological feasibility for developed software that is external to the market, to be sold or leased or marketed.

Question 10

If the patent is unsuccessfully defended, is the patent cost capitalized?

Answer 10

NO. It is expensed.

Question 11

Does omissions of work-in-process related insurance cost affect retained earnings?

Answer 11

NO. Only it it’s related to Cost of goods sold or cost of sales will it affect retained earnings.

Question 12

What is accrued liability

Answer 12

liability that you have NOT paid yet. If you paid that shit during the year, shit is not accrued.

Question 13

For software developed internally, what is the difference between cost incurred in the preliminary stage and cost incurred after the preliminary stage?

Answer 13

Cost incurred in the preliminary stage is expensed immediately, while cost incurred AFTER the preliminary stage is capitalized and depreciated over the economic life of the product

Question 14

Is development or improvement of techniques and processes a research and development cost?

Answer 14

YES

Question 15

When does the initial franchise fee becomes revenue for the franchisor?

Answer 15

When all material conditions of the sale have been substantially performed

Question 16

GAAP requires that goodwill be tested at which level?

Answer 16

Reporting unit level. It’s for investors to make decisions, so every reporting needs to be tested, because that’s one of the shit you are reporting on

Question 17

IFRS requires that goodwill be tested at which level?

Answer 17

Cash generating unit level

Question 18

How is the goodwill impairment test performed under IFRS

Answer 18

The carrying value of a cash generating unit is compared to its recoverable amount, which is the greater of its [fair value less cost to sell] and its value in use [PV of future cash flow]

Question 19

What happens to legal fees for applying the patent and legal fees for successfully defending the patent?

Answer 19

They are CAPITALIZED. If you failed to defend it, it doesn’t get shit and you have to expense it.

Question 20

What is the difference between equipment used in research and development for current project only and equipment that have alternative or future use?

Answer 20

Current R&D project only: expense the fucker completely

With alternative or future use: expense the depreciation only