bonds and present value tables

Question 1

How to calculate annuity due from ordinary annuity?

Answer 1

Add $1 and 1 year.

For ex. an annuty due for 3 years = ordinary annuity for 2 years + $1.

Question 2

What are the four types of foreign currency hedges?

Answer 2

The four foreign currency hedges are an unrecognized firm commitment, an available-for-sale security, a foreign currency denominated forecasted transaction, and a net investment in foreign operations.

Question 3

IFRS intangibles can be measured with?

Answer 3

Cost or revaluation model

Question 4

a company may disclose servicing assets on the balance sheet in one of two ways,

Answer 4

1) as a separate line item for amounts valued at fair value and amounts measured by the amortization method
2) in the aggregate for all servicing assets and parenthetical disclosure for the amount measured at fair value.

Question 5

Successful legal defense in court for patents should be?

Answer 5

capitalized. do not include r&d of proudct or process.

Question 6

when should intangible assets be tested for impairment?

Answer 6

Annually using the undiscounted present value approach

Question 7

three methods of amortization for intangibles

Answer 7

Straight line - costs are recognized equally over the useful life.
units of sales - costs are allocated based on the sales to date as a percentage of estimated total sales.
net realizable value - sufficient amortization is recorded to reduce the carrying value of the intangible to the estimated remaining future benefits.

method chosen should be the most conservative, one that reduces the CV to the lowest amount

Question 8

how do you test for goodwill?

Answer 8

annually or whenever whenever the fair market value of the asset is less than carrying value.

cv > fv.
write goodwill down to implied fv.

Question 9

computer software amortization?

Answer 9

the larger of:

straight line or ratio of revenues/total revenues

Question 10

Cost incurred after the preliminary project stage for upgrades and enhancements?

Answer 10

capitalized and amortized on a straight-line basis for internal use only.

if an entity later decides to market it. net proceeds received to CV of the software unti the CV has reached zero, then recognized as revenue.

Question 11

IFRS - developments costs may be capitalized if 6 criteria are met

Answer 11

1. Technological feasibility
2. intends to complete and use or sell the asset.
3. The enttiy has the ability to use and sell.
4. understands how the asset will generate probable future economic benefits.
5. techinical, financial, and other resources are avail to complete development.
6. entity has the ability to reliably measure the expenditures.

Question 12

IFRS allows which assets to be valued using RM model?

Answer 12

PP&E and intangibles.

Question 13

If the RM is used, how is recovery of impairment measured?

Answer 13

Would be recognized in OCI. Up to the amount of CV. Reversal of an impairment for goodwill is prohibited.

Question 14

Weighted-average rates disclosed for defined benefit pension plans include:

Answer 14

(1) the discount rate used to determine the benefit obligation, (2) the expected rate of return on plan assets, and (3) the expected rate of compensation increase.

Question 15

Items that are shown net of taxes:

Answer 15

Unusual or Infrequent Items
Discontinued Operations
Extraordinary Items
Change in Account principle
Correciton of an error

Question 16

the amount capitalized is considered the avoidable interest.

Answer 16

the amount capitalized is considered the avoidable interest.
include interest incured on construction loans, but only to the extent the funds have been spent on construction:

Capitalize interest cost if asset is:
-constructed for company’s own use (built by self or outsider).
-assets manufactured for resale resulting from a special order (ships).
Amount to be capitalized is:
Weighted average accumulated expenditures x interest rate = capitalized portion of interest.
-interest on other debt that could have been avoided by repayment of debt.
-never exceed actual interest cost.

Question 17

.

Answer 17

Derived tax revenues, which result from assessments imposed on exchange transactions (for example, income taxes, sales taxes, and other assessments on earnings or consumption)

Imposed nonexchange revenues, which result from assessments imposed on nongovernmental entities, including individuals, other than assessments on exchange transactions (for example, property taxes and fines)

Question 18

major difference between exchange and nonexchange transaction?

Answer 18

In an exchange transaction goods or services of equal or near equal value exchanged. In a nonexchange transaction one party provides value for no direct benefit.

Question 19

stock subscription assurance

Answer 19

This answer is correct because the excess is recorded as additional paid-in capital when the subscription is received. Upon receipt of the subscription, the entry is

Subscriptions receivable (subscription price)
Common stock subscribed
(stated value)
Additional paid-in capital
(excess)
Upon issuance of stock and collection of the receivable, it is

Cash	 (subscription price)
 	 Subscriptions receivable	
 	 (subscription price)
Common stock subscribed	 (stated value)
 	 Common stock	
 	 (stated value)

Question 20

The requirement is to identify the item that would be reported as program revenues on a local government’s government-wide statement of activities.

Answer 20

This answer is correct because program revenues include (1) charges for services, (2) operating grants and contributions, and (3) capital grants and contributions.

Question 21

revenue expenditures vs. capital expenditures.

Answer 21

Capital expenditures are not normal, recurring expenses, and they benefit the operations of more than one period. Examples of capital expenditures include additions, replacements, betterments, and extraordinary repairs and maintenance. Revenue expenditures are normal, recurring expenditures such as normal repairs and maintenance. The installation of an improved electrical system (a betterment) is a capital expenditure because it would benefit more than one period.

Question 22

..

Answer 22

Intangible assets with finite lives are tested for impairment when the asset’s carrying value is more than its recoverable amount. However, if an intangible asset has an indefinite life, a test for impairment must be made annually.

(1) If an intangible asset’s carrying value is more than its recoverable amount, the asset is considered impaired.

(a) The recoverable amount is the greater of the net selling price (fair value less costs of disposal) or its value in use.
(b) The value in use is determined by estimating the future cash flows expected from the continued use of the asset and its disposal.

(2) Impairments of intangible assets carried at historical cost are recognized as charges against the current period profit or loss.
(3) If the revaluation method was used for long-lived assets, any increase in value was recorded in a revalu­ation account in other comprehensive income. Therefore, the impairment adjustment is used to reverse any previous revaluation adjustment. Once the revaluation account is reduced to zero, the impairment is then charged to expense of the period.

Question 23

debt restructuring.

Answer 23

An election can also be made to value certain financial assets or financial liabilities at fair value. In­cluded in the list of eligible items is modification of debt. If the fair value option is elected, the debt is re­valued at fair value and any resulting gain or loss is recognized in earnings for the period. If the fair value option is not elected, then the rules of ASC Topic 470 (SFAS 15) apply for the debtor, and the rules of ASC Topic 310 (SFAS 114) apply to the creditor.