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CH 6 Review Flashcards

1
Q
A
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2
Q

scope guidance indicates what?

A

which transactions, items, or entities are subject to the guidance within a topic

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3
Q

the scope section may

A
  • list transactions/ entities that are not within the scope
  • contain tests to determine what transaction should be accounted for under this topic
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4
Q

before scope testing you should

A

read the topic’s overview/ other related interpretive guidance

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5
Q

What ASC section in the Codification relates to Income Taxes

A

ASC 740 (income taxes)

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6
Q

ASC 740 applies to taxes that are based on _______

A

income

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7
Q

what ASC should be used for taxes not based on income

A

ASC 450 (Contingencies

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8
Q

determining whether or not a tax is based on income can require __________

A

judgment

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9
Q

what is a nonmonetary transaction

A

if physical assets are being exchanged

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10
Q

what ASC section is used for scope typically with nonmonetary transactions

A

ASC 845

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11
Q

Nonmonetary exchanges should be recognized at the _____________ of the assets exchanged

A

fair value

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12
Q

only recognize the FV of assets exchanged in a nonmonetary exchange if the transaction has ______________

A

commercial substance

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13
Q

a nonmonetary transaction in order to be recognized at FV of assets exchanged cannot be between entities under __________

A

common control

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14
Q

what are the subsections in ASC 845

A
  • general
  • purchases and sales of inventory with the same counter party
  • barter transactions
  • exchanges involving monetary consideration
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15
Q

each subsection of ASC 845 has its own unique ________

A

scope requirements

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16
Q

2 steps in determining if a transaction is within scope ASC 845

A
  1. eval if its within scope of general subsection
  2. evaluate whether within scope of a specific subsection
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17
Q

what are two concepts applicable to non controlling interests

A
  • investments- equity method and joint ventures (ASC 323)
  • investments- equity securities (ASC 321)
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18
Q

what does investments- equity method and joint ventures (ASC 323) apply to

A

purchases of equity securities where the investor has significant influence (20% or more ownership)

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19
Q

what does investments -equity securities (ASC 321) generally apply to

A

all investments in equity securities except those accounted for under the equity method

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20
Q

what ASC # of Codification applies for controlling interests

A

810 (Consolidation)

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21
Q

ASC 810 (Consolidation) describes

A
  • the voting model
  • the variable model
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22
Q

Topic 815 covers what

A

derivatives

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23
Q

Topic 815 (derivatives) requires certain instruments be carried at ___________ and _______________ each period

A

FV; marked-to-market

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24
Q

What makes a contract a derivative? It must:

A
  • have an underlying and a notional amount
  • require little or no initial new investment
  • be capable of “ net settlement”
25
what does "underlying" mean under derivatives scope
generally means a stated price
26
what does "notional" mean under derivatives scope
generally means a quantity
27
a net settlement under the derivatives scope exists if any of the following conditions are met
- the contract says it can be settled net - net settlement is possible through market mechanism - net settlement by delivery of an asset that is readily convertible to cash
28
under derivatives scope what is market mechanism
the contract can be traded on exchange
29
under derivatives scope what does readily convertible to cash mean
if the product under contract is readily sold, just like cash
30
recognition describes _______________ an item should be recorded in the financial statements
what, when, and how
31
what is the section for recognition in Codification
section 25
32
what is the section for derecognition in the codification
section 40
33
What is the Conceptual framework number (CON _ ) on recognition
CON 5 (recognition and measurement)
34
CON 5 (recognition and measurement) cites 4 fundamental recognition criteria which are :
- definitions - measurability - relevance - reliability
35
items that meet the 4 fundamental recognition criteria according to CON 5 then they are subject to both:
- cost/ benefit constraints - materiality
36
Does FASB consider disclosure to be an adequate substitute for recognition?
No
37
ASC _______ (Revenue from Contracts)
606
38
ASC 606 (revenue from contracts) applies to periods beginning after 12/15/________ for _______ companies
2017; public
39
Which topic supersedes the other? ASC 605 (revenue recognition) or ASC 606 (revenue from contracts with customers
ASC 606 supersede ASC 605
40
Under ASC 605-10 (Revenue Recognition), revenue was generally recognized when
- it has been realized oe is realizable AND - it has been earned
41
additional criteria under ASC 605-10 for public companies
- persuasive evidence of an arrangement exists - delivery has occurred or services have been rendered - the seller's price to the buyer is fixed or determinable - collectibility is reasonable assured
42
what is the definition of revenue under the revised model
Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations.
43
what are the 5 steps in the process for recognizing revenue int he revised model
1. identify the contracts with a customer 2. identity the performance obligations in the contract 3. determine transaction price 4. allocate the transaction price to the performance obligations in the contract 5. recognize revenue when (or as) the entity satisfies a performance obligation
44
When using existing revenue model do you navigate several or one subtopic?
several
45
When using revised revenue model do you navigate several or one subtopic?
single principle in a single subtopic
46
reporting deferred tax assets and liabilities in the FS can involve ________
judgement
47
ASC 740-10 (Income Taxes) establishes a 2 step- process for the recognition of tax positions which are following
- determine whether a tax position meets the more- likely- than - not recognition threshold - if met, determine the appropriate measurement of the tax position
48
what is a subsequent event under ASC 855
an event that takes place after the balance sheet date but before financial statements are issues
49
what are the 2 types of subsequent events
- recognized subsequent events - unrecognized subsequent events
50
recognized subsequent events are also known as type ______
1
51
unrecognized subsequent events are also known as type ______
2
52
Do recognized subsequent events require an adjustment to financial statements?
Yes
53
Do unrecognized subsequent events require an adjustment to financial statements?
no; may require disclosue though to keep the FS from being misleading
54
what do recognized subsequent events do
provide additional evidence about conditions existing at the balance sheet date, including estimates inherent in preparing the financial statements
55
what do unrecognized subsequent events do
provide evidence about conditions that did not exist at the balance sheet date but arose subsequent to that date
56
what does ASC 405-10 (Extinguishments of Liabilities provide guidance on
when it is appropriate to derecognize a liability
57
what are examples of acceptable times to derecognize a liability
the debtor pays the creditor and is relieved of obligation OR the debtor is legally released from being the primary obligor under liability, wither judicially or by the creditor
58

ACCT 4021- Cases (7 decks)

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