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BECKER NOTES > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

Franchise Fee - Franchisor

A

Unearned Franchise Fee (PV)

Discount on N/R (contra asset)

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2
Q

Purchased Intangibles

A

Purchase price + legal fees + registration fees

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3
Q

Internally Developed Intangibles

A 
Expensed except for:
Legal fees for successful defense
Registration and consulting fees
Design costs
Direct costs to secure
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4
Q

Finite Intangibles Amortization

A

Straight line over shorter of legal or estimated life

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5
Q

Intangibles Valuation

A

US GAAP - Cost

IFRS - Cost or Revaluation (Gain OCI, Loss I/S)

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6
Q

Intangibles Impairment - US GAAP

A

Finite - 2 Steps
Indefinite - 1 Step
Goodwill - 2 Steps @ reporting levels
Reversal not permitted except for Held for Sale

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7
Q

Intangibles Impairment - IFRS

A

Finite/Indefinite - 1 Step BV vs NRV
NRV = Greater of FV-Cost to Sell and PV of CF
Goodwill - 1 Step @ CGU
Loss allocated 1. GW 2. Prorata to other assets
Reversal permitted

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8
Q

Impairment for Held for Sale

A

Impairment Loss + Disposal Cost
Do not amortize
Reversal permitted

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9
Q

Franchise - Franchisee

A

Initial Fee = capitalize + amortized over life of franchise

Discount = amortized over payment period using effective interest

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10
Q

Tax Rule

A

Goodwill, Startup costs - amortize over 15 years

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11
Q

US GAAP

A
  1. Qualitative test - greater than 50% chance that FV < BV

2. Quantitative test

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12
Q

R&D - US GAAP

A

Expensed except

  1. PP&E with other use - depreciation R&D
  2. On behalf of others - COS
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13
Q

R&D - IFRS

A

Research -Expensed

Development - Capitalized

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14
Q

Not R&D

A

Only with “NEW”

  1. Marketing research
  2. Qualitative control testing
  3. Routine periodic research
  4. Reformation
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15
Q

Computer Software - US GAAP

A
  1. For Sale, lease, license
    - After technological feasibility but before release for sale
    - Amortize greater of straight line or % of revenues
  2. For Use
    - After preliminary project state
    - Straight line amortization
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16
Q

Long Term Construction Contracts

  1. Completed contract
  2. % of Completion (IFRS prohibited)
A
  1. Current Asset
    a. Construction in Progress or Costs in Excess of Billings
    b. Due on A/R
  2. Current Liability
    Progress Billings or Billings in Excess of Costs

CA (CL) = Actual Costs + Gross Profit - Billings

17
Q

Installment Sales

A

Earned GP = Cash Collection x GP%
Deferred GP = Installment Receivable x GP%
(contra asset)

18
Q

Non-Monetary Exchanges - GAAP

A
  1. Commercial substance
    - G/L recognized
  2. No commercial substance
    - Loss recognized, Gain rules:
    Proportional gain = Boot received < 25% FV
    Full gain= Boot received >= 25% of FV
19
Q

Non-Monetary Exchanges - IFRS

A
  1. Dissimilar
    - G/L recognized
    - If FV = BV, G = cash received, L= cash paid
  2. Similar
    - L recognized, no G
20
Q

Monetary A/L

A

Fixed (Cash, Receivables, Payables)
Loss = Monetary assets during inflation
Gain = Monetary liabilities during inflation

21
Q

Non-monetary A/L

A

Flucuate

22
Q

Reporting Currency

A

US 1

23
Q

Functional Currency

A

Currency of primary economic environment

24
Q

Foreign Currency Accounting

A
  1. FC Translation
    - Remeasurement/Temporal - I/S
    - Translation/Current Rate - OCI
  2. FC Transaction - I/S
25
Q

Remeasurement

Foreign currency not Functional currency

A

Dysfunctional (Foreign currency not Functional)
B/S Monetary (yr-end), non-monetary (historical)
I/S B/S related (historical) non B/S (weighted)
Currency G/L - I/S

26
Q

Translation

Functional currency to Reporting currency

A

Foreign Currency is Functional
I/S: weighted average
B/S: A/L (Yr-end); C/S and APIC (historical)
Cumulative Translation Adjustment - OCI

27
Q

FC Transaction

A

Unrealized G/L on FC - I/S

28
Q

Other FS Presentation

A
  1. OCBOA - Other Comp Basis of Acctg
    - Cash, Modified, Tax, Regulatory, Defined Set
  2. Personal FS
29
Q

Personal FS

A
  1. Statement of Financial Condition
    - Assets @ FV, Liabilities @ current amount
    - Life insurance loan payable netted against cash surrender value
    - Large business interest - Single amount
  2. Statement of Changes in Net worth (optional)

BECKER NOTES (7 decks)

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