#6 Flashcards
What is regulation S-K?
Instructions for filing for nonfinancial statement forms required by the SEC
What is regulation S-X
Information regarding financial statements that must be filed to the SEC
Income is constructively received and included in gross income if
it’ is readily available to the taxpayer AND actual receipt is not subject to substantial limitations or restrictions
How do you report a change in accounting principle?
Adjust retained earnings. It does NOT affect income.
What is amortization?
Allocation of cost over time
Should research and development cost be capitalized?
NO. It should be expensed
When is goodwill incurred?
Only when it’s from purchase of another entity. Cost from maintaining and developing goodwill are expensed
When you calculate the company’s income, how does the owner’s investment and withdrawing of investment affect it?
It does NOT affect it. Owner’s investment and withdrawl of it falls in stockholder’s equity.
What does research and development include?
costs include prior to technological feasibility for developed software that is external to the market, to be sold or leased or marketed.
If the patent is unsuccessfully defended, is the patent cost capitalized?
NO. It is expensed.
Does omissions of work-in-process related insurance cost affect retained earnings?
NO. Only it it’s related to Cost of goods sold or cost of sales will it affect retained earnings.
What is accrued liability
liability that you have NOT paid yet. If you paid that shit during the year, shit is not accrued.
For software developed internally, what is the difference between cost incurred in the preliminary stage and cost incurred after the preliminary stage?
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
Is development or improvement of techniques and processes a research and development cost?
YES
When does the initial franchise fee becomes revenue for the franchisor?
When all material conditions of the sale have been substantially performed
GAAP requires that goodwill be tested at which level?
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
IFRS requires that goodwill be tested at which level?
Cash generating unit level
How is the goodwill impairment test performed under IFRS
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]
What happens to legal fees for applying the patent and legal fees for successfully defending the patent?
They are CAPITALIZED. If you failed to defend it, it doesn’t get shit and you have to expense it.
What is the difference between equipment used in research and development for current project only and equipment that have alternative or future use?
Current R&D project only: expense the fucker completely
With alternative or future use: expense the depreciation only
