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ACYFAR 3 > CURRENT LIABILITIES > Flashcards

CURRENT LIABILITIES Flashcards

1
Q

This is an existing liability of uncertain timing or amount.

A

Provision

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2
Q

TRUE OR FALSE:

Provisions may use estimates in measurement.

A

True

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3
Q

How are provisions measured?

A

At the** best estimate x chances of loss x 1.RAF x PV Factor.**

RAF = Risk Adjustment Factor

If no risk adj factor, the best estimate is enough.

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4
Q

What are the two approaches of measuring provisions in finding the best estimate?

A
  1. Midpoint of the range (Highest + Lowest)/2
  2. Expected Value Approach (Multiply all amounts to the given probability and adding it all)
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5
Q

What would be considered as probable in order for a provision to be measured?

A

More than 50%

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6
Q

RECOGNIZE, DISCLOSE, IGNORE?

CONTINGENT ASSET:
Probable

A

Disclose
(in notes)

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7
Q

RECOGNIZE, DISCLOSE, IGNORE?

CONTINGENT ASSET:
Possible

A

Ignore

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8
Q

RECOGNIZE, DISCLOSE, IGNORE?

CONTINGENT ASSET:
Reasonably Certain

A

Recognize

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9
Q

RECOGNIZE, DISCLOSE, IGNORE?

CONTINGENT ASSET:
Remote

A

Ignore

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10
Q

RECOGNIZE, DISCLOSE, IGNORE?

CONTINGENT LIABILITY:
Reasonably Certain

A

Recognize

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11
Q

RECOGNIZE, DISCLOSE, IGNORE?

CONTINGENT LIABILITY:
Probable

A

Recognize

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12
Q

RECOGNIZE, DISCLOSE, IGNORE?

CONTINGENT LIABILITY:
Possible

A

Disclose
(in notes)

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13
Q

RECOGNIZE, DISCLOSE, IGNORE?

CONTINGENT LIABILITY:
Remote

A

Ignore

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14
Q

Give the percentage range for each:
1. Remote
2. Possible
3. Probable
4. Reasonably Certain

A

REMOTE: 0-49%
POSSIBLE: 50%
PROBABLE: 50% - 94%
REASONABLY CERTAIN: 95%-100%

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15
Q

What does it mean when a long term interest bearing note has a realistic rate?

A

NR = ER
Nominal Rate = Effective Rate

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16
Q

What does it mean when a long term interest bearing note does not bear a realistic rate?

A

NR ≠ ER
Nominal Rate is not equal to Effective Rate.

17
Q

What is the initial measurement of a long-term interest bearing note that bears a realistic rate?

A

Face Value

18
Q

What is the initial measurement of a long-term interest bearing note that DOES NOT bear a realistic rate?

A
  1. CPE
  2. Present Value
19
Q

What is the subsequent measurement of a long-term interest bearing note that bears a realistic rate?

A

Face Value

20
Q

What is the subsequent measurement of a long-term interest bearing note that does not bear a realistic rate?

A

Amortized Cost

21
Q

How do you find the interest PAID from a long term interest bearing note that bears a realistic rate?

A

Face Value x Nominal Rate

22
Q

How do you find the interest EXPENSE from a long term interest bearing note that does not bear a realistic rate?

A

CA, beg x Effective Rate

23
Q

How do you find the interest PAID from a long term interest bearing note that does not bear a realistic rate?

A

Face Value x Nominal Rate

24
Q

How do you find the interest EXPENSE from a long term interest bearing note that bears a realistic rate?

A

Face Value x Nominal Rate

25
Q

How do you find the INITIAL MEASUREMENT of non-interest bearing note?

A
  1. CPE
  2. Present Value
26
Q

How do you find the SUBSEQUENT MEASUREMENT of non-interest bearing note?

A

Amortized Cost

27
Q

How do you find the INTEREST PAID of non-interest bearing note?

A

Face Amount
x
Nominal Rate

28
Q

What is the initial measurement of a short term note?

A

Face Amount

29
Q

When should you recognize provisions as current liability in terms of when it was filed?

A

Either:
1. When the event happens on or before the reporting date and the filing happens on or before reporting date.
2. The event happens on or before the reporting date and the filing happens before the issuance of FS. (ADJUSTING ENTRY)

30
Q

How do you find total provision?

A

Best Estimate x Chance of Loss x 1.RAF x PV Factor

ACYFAR 3 (9 decks)

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