8/14 Flashcards
SEC regulations for the financial statement presentation and disclosure requirements for SEC filings can be found in
Regulations S-X
S-K is for non-financial reporting requirements for public companies
S-T is for electronic filings
S-B is for small business issuers
Costs of one year warranties are estimated and accrued for a one year period for financial reporting purposes
Determine how the tax difference would be classified on the FS
Temporary timing difference, non-current asset
Warranty expenses are deducted for tax purposes when paid. Therefore they are a future benefit when paid.
A company elects to prepay its liability insurance for a one year period that overlaps its BS date.
Determine the tax difference and how it would be classified on the FS
Temporary timing difference, non-current liability
Expenses paid in advance are taxed at the time of payment. Thus prepaid will reduce the current tax but increase tax in the future. Therefore it is a future tax liability.
On Aug 31, yr 2 Harvey decided to change from FIFO to WA inventory. Harvey is a calendar year basis, uses GAAP and does not present comparative FS. The cumulative effect of the change is determined as of?
Jan 1, yr 2.
If there were comparative FS then an adjustment to beginning RE would be necessary
On Apr 1, yr 2 Hill issued 200 of its $1,000 face bonds at 101 plus accrued interest. The bonds were dated Nov 1, yr 1 and bear interest at an annual rate of 9% payable semiannually on Nov 1 and May 1. What amount did hill receive from the bond issuance?
209,500
200x1,000x1.01 = 202,000
Interest accrued = 200,000x.09x5months = 7500
202,000+7500 = 209,500 cash received
The remainder of the transaction would be
Cr Bond payable 200,000
Cr Unamortized Premium 2,000
Cr Bond Interest Payable 7,500
Dawg Corp changed from FIFO to LIFO.
What is the type of change and method to account for
Change in Accounting principle
Prospective
Duck Co. changed from income tax basis to full accrual.
Type of change and method to account for
Correction of an Accounting error
Restate prior periods
A change from non GAAP to GAAP is considered to be error correction
Gosling LLC was acquired by Goose International
Type of Change and method to account for
Change in entity
Retrospective
Gosling will restate prior periods presented for comparative purposes. Under GAAP this restatement is called retrospective adjustment.
Kitty Corp decided to improve shareholder return by changing from LIFO to FIFO
Type of change and method to account for
Not an acceptable change, no change
If a company is changing its method presumably because it expects COGS or decrease, improve net income, shareholder returns and stock price then the change is not acceptable.
The final judgement in a lawsuit is decided in the current year. The amount is significantly greater than previously recorded in prior year.
Type of change and method to account for
Change in estimate
Prospective
No need to restate prior estimate.
Gruber Township owns and operates a utility that provides Water and Sewer services. Although the service is primarily supported by user fees, the system receives a general tax subsidy from the General Fund. What fund would Gruber most likely use to account for the transactions of its utility operations?
Enterprise Fund.
Operations primarily funded by outside user charges would be Enterprise fund.
Dollar LIFO computed index
Ending inventory at current year cost / Ending inventory at base year cost
A 10 mil budgeted excess of revenues over appropriations should be
- debited to budgetary control
- credited to budgetary control
- debited to estimated excess revenues control
- credited to estimated excess revenues control
credited to budgetary control
Gow and Cubb formed a partnership on march 1 and contributed the following
- Gow, Cash 80,000
- Cubb, Equip 50,000
The equipment was subject to a mortgage of 10,000 that was assumed by the partnership. The partners agreed to share profits and losses equally. Cubb’s capital account at March 1 should be:
40,000
FMV of equip 50,000 less mortgage assumed 10,000 = 40,000
When the recoverability of a building’s carrying value is determined to be impaired, the building’s FV is measured as the:
Price based on observable inputs in its principal market.