#9

Question 1

When a fixed asset is sold (voluntarily or involuntarily), gain or loss is recognized as part of what?

Answer 1

Income from continuing operation

Question 2

Advanced payment received for goods to be manufactured and delivered within a year is:

Answer 2

Current liability. You accepted the money without performing the service, and it’s due within a year.

Question 3

Is nonrefundable sign-up fee part of rent revenue

Answer 3

Yes

Question 4

What is opening balance?

Answer 4

Ending balance of prior period becomes the opening balance of this period.

Question 5

Gross profit % is used for installment sales

Answer 5

Remember it

Question 6

Installment accounts receivable * gross profit % = deferred gross profit

Answer 6

Deferred gross profit at year end / gross profit % = installment accounts receivable

Question 7

Royalty expense is just what the artist has earned. All that bullshit about prepaid, advances, all that shit is not it

Answer 7

Yoyoyo

Question 8

Current cost financial statements can hold gains and losses on all accounts in the financial statement, including inventory and goods sold.

Answer 8

Yes

Question 9

How to calculate holding gain in merchandise under current accounting

Answer 9

replacement cost - purchase price

Question 10

Difference between how held-to-maturity debt securities(bonds) and available-for-sale debt securities are reported?

Answer 10

Held-to-maturity reported as amortized cost

Available-for-sale reported as fair value

Question 11

Trading securities are reported at

Answer 11

fair value with unrealized gains and losses included in earning

Question 12

Available-for-sale securities are reported

Answer 12

at fair value with unrealized gains and losses reported as a separate component of other comprehensive income until realized

Question 13

What happens when available-for-sale securities suffer permanent loss on investment? Does it impact the income statement?

Answer 13

Unrealized gains and losses of available-for-sale securities are reported in other comprehensive income with no impact on income statement. However, a permanent impairment loss is a REALIZED loss, which results in a writedown and a charge to the income statement.

Question 14

How to calculate unrealized gain or loss in available-for-sale securities for year 2?

Answer 14

FV - Cost + unrealized loss in year 1

FV - Cost - unrealized gain in year 1

Question 15

Is discount amortized on short-term investments?

Answer 15

No

Question 16

When marketable securities change transfer between trading and available-for-sale , how is it reported?

Answer 16

The transfer is made at fair value, and any difference is recorded as unrealized loss and charge to income statement

Question 17

When a company has both intent and ability to hold to maturity, how are long-term and short-term securities reported?

Answer 17

Both are reported at carrying amount (amortized cost) unless there is a permanent decline in market value. Doesn’t matter if it’s short-term or long-term.

Question 18

Does trading securities affect income statement?

Answer 18

Yes. It’s unrealized gains and losses from available-to-sale securities that does not.

Question 19

How should you report unrealized loss on investment in available-for-sale securities?

Answer 19

Unrealized loss should be debited to the other comprehensive income account. When it’s sold, it would eliminate it by crediting the OCI account and record a realized loss on the income statement by debiting it.

Question 20

Difference between IFRS and GAAP for reversal of impairment losses for available-to-sale securities

Answer 20

Prohibited under GAAP

Allowed under IFRS, booked to current year’s income statement