Conceptual Framework and Financial Reporting

Question 1

How should a material transaction that is INFREQUENT in nature but NOT UNUSUAL in nature be disclosed on the Income Statement?

Answer 1

Disclosed as a separate line item, but still as part of continuing operations.

Question 2

Define “Accruals”

Answer 2

Concerned with expected FUTURE cash receipts and payments.

Question 3

Define “Defferals”

Answer 3

Concerned with expected PAST receipts and payments.

Question 4

How should discontinued operations be reported on the Income Statement?

Answer 4

Separately, net of tax.

Question 5

How should fees collected IN ADVANCE be recognized?

Answer 5

Evenly throughout the year.

Question 6

What should a deferred service revenue be considered as?

Answer 6

A liability until the service has been performed.

Question 7

How should a franchisor report revenue from initial fees?

Answer 7

They should report revenue when all obligations are finished.

Question 8

What is the equation for % Completion Method for Construction to find profit recognized?

Answer 8

(TOTAL Cost to Date / TOTAL Estimated Cost of Contract) x Profit Recognized (Less Prior Period Profit)

Question 9

What is the equation to determine current asset or liability during the % Completion Method?

Answer 9

Cumulative Costs + Cumulative G.P - Cumulative Billings = + Asset or - Liability

Question 10

A financing arrangement can be classified when the repurchase price is ???? then original price and market value.

Answer 10

Repurchase Price >= Original Price and Mkt Value

Question 11

What are incremental costs?

Answer 11

Costs that would have not occurred if the contract had not been obtained.

Question 12

When should losses be recognized for % Completion on Construction and Completed Contract Method?

Answer 12

Immediately

Question 13

When should losses or gains in discontinued operations be recognized? What items should they include?

Answer 13

They should be recognized in the year incurred. They include all operating, selling, and impairment losses.

Question 14

Change in Accounting Estimate should be handled…

Answer 14

Prospectively

Question 15

Change in Accounting Entity should be handled…

Answer 15

Retrospectively… and restate…

Question 16

Change in Accounting Principle should be handled…

Answer 16

Retrospectively… adjust that Beg RE net of tax

Question 17

Change to from XXX to LIFO….

Answer 17

Treat like change in estimate, handle prospectively

Question 18

Change from XXX to Different Method of Depreciation

Answer 18

Treat like change in estimate, handle prospectively

Question 19

Change due to Accounting Error

Answer 19

RESTATE RESTATE RESTATE

Question 20

What types of things go into OCI?

Answer 20

PUFIER
Pension Adjustments
Unrealized G/L on AFS Debt Securities
Foreign Currency Translation Adjustments
Instrument-Specific Risk
Effective Portion of CF Hedges
Revaluation Surpluses (IFRS ONLY)

Question 21

Comprehensive Income Equation

Answer 21

NI (after tax) + PUFIER (net of tax) = CI

Question 22

If year 2 payments are made for year 1, should they be included in year 1?

Answer 22

Yes, they should be included in year one for AJEs

Question 23

Do non-interest bearing notes record interest payable?

Answer 23

No, the implicit interest rate is being accounted for within the CV of the note.