7

Question 1

What will be included in total revenues for a single step income statement?

Answer 1

All sales of goods, services, and rentals.

Question 2

Damages that are frequent and considered usual, should be reported on:

Answer 2

income from continuing operations and don’t require separate disclosure.

Question 3

Disposal of a component of a business is considered a:

Answer 3

discontinued operation.

Question 4

An entity is considered to be a going concern if it is reasonably expected to settle all its obligations for the foreseeable future. Management if required to evaluate whether there is substantial doubt to continue as a going concern within:

Answer 4

one year of the date the financial statement are issued.

Question 5

Going concern considerations as plans to mitigate events that raise substantial doubt about an entity’s ability to continue as a going concern. :

Answer 5

1. It is probable that the plans will be effectively implemented
2. It is probable that the implemented plans will be successful in mitigating the adverse conditions or events.

Question 6

Formula to calculate dollar threshold for reportable segment “size test”:

Answer 6

10% of the total revenues sales or profits. Any amount over the 10% is considered a reportable segment.

Question 7

Formula to calculate dollar threshold for reportable segment “sufficiency test”:

Answer 7

75% of the total EXTERNAL revenues sales or profits.
After establishing the reportable segment (all segments over 10% of the TOTAL revenues sales or profits), then compare and see if these segments satisfy the 75% threshold. If not, then select another non-reportable segment (the largest one), until reaching the 75% threshold.

Question 8

Only footnotes disclosures are required for losses in the event that the losses are:

Answer 8

reasonably possible.

Question 9

As an entity that doesn’t file its FS with the SEC, sub events run through the date that the FS’s are in a form that comply with GAAP and:

Answer 9

all approvals have been obtained for issuance.

Question 10

How to classify short term notes payable that are re-financed as long term notes after year end, but before issuance?:

Answer 10

They are classified as LTD, and a disclosure is necessary.

Question 11

When a sub is acquired with an acquisition cost less than the Fv of the underlying assets, the following steps are required:

Answer 11

1) BS is adjusted to DV, which creates a negative amount in the acquisition account. 2)Identifiable intangible assets are recognized at Fv, which increases the negative balance in the acquisition account. 3) The total negative balance in the acquisition account is recorded as a gain.

Question 12

Formula to calculate noncontrolling interest under the IFRS partial goodwill method:

Answer 12

of subsidiary’s net assets “X” NCI%

Question 13

Formula to calculate noncontrolling interest under GAAP:

Answer 13

FV of Sub “X” NCI%

Question 14

Formula to calculate Goodwill under the IFRS partial goodwill method:

Answer 14

Acquisition cost “-“ FV of subsidiary’s net assets acquired.

Question 15

Agricultural products (and precious metals) may be stated at above cost by using net selling price less cost of disposal (NRV) because:

Answer 15

1. There is a ready market for such items (i.e., legislated price)
2. There is unit-interchangeability

Question 16

During periods of inflation, a perpetual inventory system would result in the same dollar amount of ending inventory as:

Answer 16

FIFO periodic.

Question 17

Lower of cost or market rule:

Answer 17

Compare floor (Selling price - cost to sell - profit margin) with ceiling (Selling price) and replacement cost, compare the middle amount with the cost. Then compare to cost and choose the lower amount.

Question 18

What needs to be done if the market value is materially less than the inventory book value?

Answer 18

Loss is recognized in the income statement, description of the contract in a note to the financial statements, liability is accrued for the loss.

Question 19

Gains and losses on hedges of firm commitments for a future purchase be recognized:

Answer 19

in current income.

Question 20

In order for a financial instrument to be a derivative for accounting purposes, it must contain:

Answer 20

one or more underlyings, and doesn’t require an initial investment.

Question 21

When should gains and losses resulting from the change in FV of a hedge be reported?

Answer 21

In current net income in the period in which the fair value of the derivative changes.

Question 22

Fair value hedge criteria:

Answer 22

1. Formal documentation of hedging relationship
2. Expected to be highly effective in offsetting changes in FV
3. Specifically identified
4. hedge exposes changes in FV that could affect net income.

Question 23

Overfunded defined benefit pension funds are recorded as what type of asset?

Answer 23

Long term asset

Question 24

Net periodic pension cost formula:

Answer 24

“SIRAGE”
current SERVICE cost
INTEREST cost: d

AMORTIZATION of prior service cost
and losses
amortization of EXISTING net obligation or net assets