Basic Theory And Financial Reporting Flashcards
Which of the following are required as part of the filing of the form 10 – K?
Both a comprehensive report of the company’s business and financial condition and audited financial statements
Double declining method formula
2 X straight-line depreciation rate X Book value at the beginning of the year
Ex 100,000.00 useful life =5 no salvage value
2 x 1/5 x 100,000.00= 40,000 year 1 BV = 100,000 - 40,000 = 60,000
Year 2: 60,000 x 1/5 x 2 = 24,000
Year 2 BV = 60,000 - 24,000 = 36,000
Under US GAAP, an exception is allowed for the and practicality of calculating the impact of changes in Accounting Principals. For which category does IFRS allow an exception of the impracticality?
Changes in accounting principles and correction of errors.
Subsequent events take place,
– After the formal balance sheet date.
– After the balance sheet is issued
The correct answer is number one after the Formal balance sheet date subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued or available to be issued.
How should the effect of the change in accounting principle that is inseparable from the effect of the change in accounting estimate to be reported?
As a component of income from continuing operations.
Compared to the accrual basis of accounting, The cash basis of accounting understates income by the net decreased during The accounting period of:
Accrued expenses
In summary, cash basis income is
– Higher when account receivable decrease.
– Lower when accrued expenses decreases
What are the three items that are never extraordinary items?
One – foreign currency devaluation
Two – effect of a strike whether good or bad labor strike
Three – write-downs of any assets includes inventory, PPand E, intangibles, goodwill receivables
What are the permanent differences and deferred taxes?
One – State and municipal bond interest income is included and book income but not included in taxable income
Two – life insurance premium expense when the corporation is the beneficiary deducted for book income but not for taxable income proceeds received on such policies resolved and a book game but are not taxable
Three – federal income tax expense: did the kids for book income but not for taxable income
Four – payment of penalty or fine deducted for book income but not for taxable income
Five – dividend received the duction deducted for taxable income but not for book and come
How to determine Gain or Deferred gain from a sales leaseback
First if the present value of the lease divided by sales price less then 10% that means that we record the gains or losses immediately. In case the present value or the lease term payments are greater than 10% but less than 90% that means The deferred gain will be the present value of the annual lease payments and the amount of income that is recognizing the Current period Will be that sales price minus carrying value minus present value of the annual lease payments
In case the present value of the leaseback is greater than 90% in this case the value off sales price minus the caring value would be totally recognized
How to recognize gains or losses for lease under IFRS
Under finance please games are deferred amortize over the lease term
Under operating lease gains or losses I recognized based on the relationship between the least assets carrying value, fair value, and selling price. If the sales price is equal to the fair value any profit or loss is recognized immediately no deferral
What are the determinations of the pension expense?
One service cost it will be given
Two – interest on projected benefit obligation that will increase the pension expense and The calculation is beginning PBO times the sediment rate or discount rate
Three – actual return on plan assets equals beginning balance of Assets at fair value plus contribution minus benefits paid equals subtotal this subtotal is compared to the ending balance of plan assets at fair value
How to calculate the funded status of pension plan?
Projected benefit obligation at the end of the year compared to fair value of plan assets
How do we know when you know it’s payable or a bonds payable as sold by a premium or a discount?
When the contract rate of a bond or notes payable is higher than the interest rate of the market or the yield rate that means that we are selling the bond on a premium conversely if the bond contractual rate is less than that yield rate that means we have a discount
