aFar_1 Flashcards
A company reports land on its BS at historical cost even though the FV of the land is significantly higher at the BS date
Measurement principles
Bad debt expenses
G_A expenses, Becker
Sign contract - capital or expenses
Capital \$\$ incurred only success Ex: capitalized Book copyright-> capitalized lawyer review contract $ Sales commission $ - success got commission
Design - expenses
Construction liability Question
Cost incurred \+ Profit recognizes - Billings collect ————————— Asset or Liabilities is recognized
LT construction
Contract $ Estimated total Cost Cost incurred to date Estimated Cost to complete billing to date Cash collection to date
G_A
Other Revenues & Gain
G_A: bad debt expenses,
Depreciation expenses
Others: Interest
Loss on write down inventory
Discontinued OP
Disposal Line of Business- NO
Sale is Segment - YES
EI - overstate -> auto adj next year
Year 1
BI \+Pur ———- COGAS - EI UP ————- COGS DWN —> NI Up —> RE Up
Year 2
BI \+Pur ———- COGAS - EI DWN ————- COGS UP
I/S or OCI
Comprehensive Income in SH equity
Loss on available for sale -> OCI
Foreign currency Translation-> OCI
Unrealized Loss on available for sale Security -> OCI
Trading securities-> I/S
Realized g/l on available for sale -> I/S
Unrealized G/l on trading -> I/S
Gain on foreign currency Re-measurement -> I/S
Loss on foreign currency Transaction
Loss on available for sale Security
Retrospective
prospective
If show FS -> Retro all;
if no show FS -> RE
Rules for Adjusting JE
By 12/31
Never involve Cash account
Will hit one I/S and one B/S
Change in accounting Estimated
Inventory obsolete written off
Tax accrued adjustment
- change from cash to accrue accounting-> Restate prior period
- acquired company - change in entity -> Retrospective
- Can Not change between completed contract to % contract
- ineffective hedge transaction-> I/S
- net income closed to RE;
OCI closed to accumulated OCI -> In shareholders equity - consignment Freight Cost -> % Sales portions
- $ spend uniformly during the year = 1/2 $
*
Significant accounting Policy or Note only
POLICY Basis of consolidation Depreciation Method Basis of PPE measurement: a level 1, 2 or 3 *NO numbers in it
NOTES ONLY Concentrate of Credit Risk Change in stockholders equity Info about significant asset/liab account Info about change shareholders equity Description of company pension plans Notes need details
Gonging Concerns - footnotes disclosure explains
IFRS ONLY
- Statements of Compliance with IFRS
- Disclosure of judgement made in preparation of FS, - Asset categorized as “hold to maturity” or “available for sale”.
Concentration
*Concentrate, if only to specific region - no need notes
Two big customers -> disclose Amount Revenue from each of the two customers.
FV measurement framework (M I C)
The price to SELL, not buy - exit price
Level 1: Identical - active market - money market fund
L2: Similar - Active market
Or Similar / Identical Not Active Market
Available 4 sale security, derivatives financial instruments
L3: Estimated Future Cash Flows - goodwill
Not including Transaction, but Transportation Yes
Accounting estimated
Segment report 10% of
- Combined revenue - not consolidated - it’s total revenue, not net income
- OP profit - not Loss (ADD LOSS BACK to calculate threshold, 75%)
- Identifiable asset - no liability
Both: No segment cash flow
GAAP: no segment Liability - IFER, Yes
10K 10Q 11K: employee benefits plan 20F: non US 10K 40F: Canadian 10K
6K: non US 10Q
8K: major Event
Forms 3, 4, 5 = 10% owners
Regulations S-X - interim FS
10K - Annual -
- 60d Large Accelerate, $700 millions;
- 75d Accelerated, $75 million;
- 90d others (3 months)
- Income tax expenses disclosed required
10Q - quarterly -
- !40d,
- 40d,
- 45d
% of completion - 4 steps
- Gross profit of completed contract
- % of completion
- Profit to date
- Profit earned for current year
Reg S-X SEC require
2 BS
3 IS, cash flow, change owner equity
Software depreciation
Greater of SL or sales %
- Revenue Recognized at time of production - agreement at the prevailing price
- Revenue/Loss Recognition: yearly minimum purchase agreement loss
- Agriculture products or precious metals
- Lower Cost or Market - GAAP
2. Lower cost or NRV - IFER
- NRV
Replacement
NVR - (selling $ margin)
2.
Depreciation
Double decline: no need minus Salvage value, BUT can’t depreciate below Salvage
- 2/Year
Add salvage if ask Book Value
Sum of the digit: minus salvage
- [Y(Y+1)] / 2
Non monetary transactions
JE - plug
- Commercial:
gain = FV - BV - No Commercials:
* No $ Received -> no gain -> use BV
* $ Paid < 25% -> no gain
- $ Received -> recognizes proportion
- $ Paid or Received > 25% -> recognizes All
- Loss recognized either no $ or has $
- IFER: exchange similar FV asset. Gain/Loss = cash give up
- commercial exchange -> transactions value = FV surrendered.
Unearned “cash received price”
is better estimated than
Unearned merchandise retail price
Prime rate, discount rate, market rate
The prime rate (also called “prime lending rate,” or even “prime”) is the rate at which banks loan preferred customers funds for mortgages, loans and credit cards, and is the best rate customers can obtain. Currently, the prime rate sits at 5.50%.
The “discount rate” or “primary credit rate” is the interest rate the Federal Reserve sets and offers to member banks and thrifts that need to borrow money in order to prevent their reserves from dipping below the legally required minimum.
The market rate, also known as the going rate, is the usual price charged for a good or service in a free market, rather than one fixed by a state authority. … In the world of finance, market rate refers to the rate of interest that is paid on a debt security that trades in the open market.
