CH 4 Flashcards
Factoring
1 - With Recourse
2 - Without Recourse
1 - Ownership is not transferred
2 - Ownership is transferred
Accrual A/R method
Allowance
Direct Write off does not match expenses with Revenues
A/R Recovery JE:
Result:
A/R XX
Allowance XX
Cash XX
A/R XX
Increase in Allowance for Uncollectibles and Increase in CASH - A/R CANCELS
Differentiate
1 - Bad Debt Expense
2 - Allowance for Uncollectibles EXCLUDES:
1 - Allowance Account Balance - Current Year Uncollectibles
Income Statement Effect
2 - Current Yr collectibles ONLY
EXCLUDES Written off Amounts
Classification: Inventory Fixed Assets Overdraft Prepaid
Current Asset
Noncurrent Asset
Current Liability
Asset or current liability
Deferred Tax Liability Classification
1 - Reversing in Next Year
2 - Depreciation
1 - Current
2 - Non current
Bond Sinking Fund
Restricted Cash NOT LIQUID
Quick Ratio
Cash + Net Receivables + MKT Sec. / Current Liabilities
Factoring is effect by:
1 - Allowance for Sales Returns
2 - Commission Charged
Reduce amount received from factoring
Uncollectible Accounts is what
Contra Assets :
Debits decrease
Credits increase
But still considered an asset account
Net sales Revenue uncollectibles period
any known uncollectibles are always booked
Mortagages
Note Payments
Incrimental Payments
TRICK
always include current year portion in CURRENT ASSET
Capitalized Interest LESSER of
Avoidable Interest (Weighted Avg * %)
OR
Total Expense Incurred * %
Interest is capitalized under 2 other circumstances
1 - During a construction period
2 - Assets held for sale
IFRS Revalution
1 - Gains
2 - Losses
1 - directly to OCI unless offset prior losses
2 - directly to the I/S unless offset prior gains
IFRS Investment Property
1 - Items included
2 - Items disclosed
1 - rental income & buildings for capital appreciation
2 - FMV of investment property
IFRS excluded inventory valued at
1 - replacement cost
2 floor
LIFO Layers
Step 1
Step 2
Step 1
Total Cost/ Total Based = Index
Step 2
Index * Layer = Dollar LAYER VALUE
Price Level Changes use
LIFO
Achieve the lowest inventory value by
separating each inventory item
Cosignor Cosignee Rules 1 - Inventory Recordance 2 - Profit Recordance 3 - Commission is based of 4 - Cosignor costs
1 - remains of cosignors books unit sold
2 - becomes profit when sold by cosignee
3 - GROSS profit
4 - storage of inventory and shipment to cosignee
FIFO Versus LIFO
NI
Inventory
Lowest Inventory Turnover
Inverse
COGS/Avg Inv.
FIFO
Additional LIFO Methods
1 - Perptual
2 - Periodic
3 Moving Avg
1 - Find COGS by moving backwards from latest date of purchase cost (NEW to OLD)
2 - Find COGS by moving forwards from earliest date of purchase cost (OLD to NEW)
3 - Average of all prior purchases
Disposal
MKT ceiling
MKT floor
ceiling reduce by disposal
floor reduce by disposal and profit margin
Obsolete inventory is included as
COGS
Ending EI Effect on COGS
Inverse
IFRS disallows inventory valuation at
LIFO
