Ch 6 Review Questions Flashcards
What function does scope guidance serve within the Codification?
To indicate which transactions, items, or entities are subject to the guidance within a topic.
What are two ways that scope guidance is commonly presented within the Codification?
1) Lists specific transactions that are or are not within the scope
2) Contains tests to determine what transactions should be included within the scope of the guidance
At what point during your research should you consult scope guidance?
It is helpful to consult it first or after the overview section for topics listed in the Broad Transaction area.
For other topics, consult it after looking at recognition or measurement guidance first.
No set rules about when to consult the scope section.
What additional steps should a researcher consider performing, before undertaking a detailed scope test?
1) Read the overview section of the topic to make sure that use of this topic makes sense
2) Check to see if there is implementation guidance or a non-authoritative source that can offer additional information on this scope test
Explain the relationship between general and subsection scope guidance in ASC 845 (Nonmonetary Transactions).
The general scope section applies to everything within the topic while each subtopic section has its own unique scope.
For a transaction to be recorded under the topic, it must meet the general scope requirements and scope requirements for one of the subtopics.
In what circumstances should your review of scope guidance be included in your documentation?
When the scope guidance involves some complexity.
If there is judgment or specificity in the scope section that you took time to carefully consider, describe it in your memo.
Why is it important to determine whether promises made to the customer are distinct? What’s the significance of this concept?
It helps categorize the different performance obligation portions of a contract.
The significance of this concept is to apply the five-step revenue recognition model to determine how an entity recognizes revenue.
Explain what it means for a subsequent event to be unrecognized. Provide one example.
The event must provide evidence about conditions that did not exist at the balance sheet date but arose after the balance sheet date.
Ex.
The sale of a bond or capital stock issued after the balance sheet date but before the financial statements are issued or are available to be issued.
