Day 17

Question 1

If a not-for-profit receives a donation of Cash with no donor imposed restrictions, how will it be reported on the Stmt of Cash Flows?

Answer 1

Classified as inflows from operating activities

When a donation is restricted for acquiring, constructing, or improving a long term asset, then the donation is an inflow from Financing Activities

Question 2

If a previously written off account ends up being collected, what is the JE?

Answer 2

The Allowance for Doubtful accounts would increase

1st entry: Reverse the write off
Dr - AR
Cr - Allowance for Doubtful Accounts

2nd entry: Record the Collection
Dr - Cash
Cr - AR

Question 3

Examples of Cash Flows from Financing Activities:

Answer 3

1. Dividends paid - decrease
2. Proceeds from issuing Common Stock - increase
3. Borrowing on a line of credit - increase
4. Proceeds from issuing convertible bonds - increase

Question 4

Under which methods are stock dividends of common stock recorded at FMV?

Answer 4

None

Stock dividends and stock splits are considered income to the recipient

MCQ-01562

Question 5

When a lawsuit is probable and can be estimated, what are the effects on the BS and P&L?

Answer 5

Increase Liabilities for the Accrued loss

Increase expense

MCQ-00918

Question 6

ABC has an 8% three year construction loan. They made a $1 million payment on Jan 1st and a $1 million payment on December 31st. What amount of interest costs can be capitalized in the CY?

Answer 6

Calc for Weighted Average Expenditure:

1,000,000(12/12) + 1,000,000(0/12) = 1,000,000

×
.08
= 80,000 of interest to be capitalized

MCQ-08592

Question 7

Indirect Method of Cash Flows:

Answer 7

Reconciliation = NI + Depr - Losses + Gains

G/L = Non-Operating

MCQ-08942

Question 8

What Method should be used for investment income?

Answer 8

Fair Value = 0 - 20%

Equity = 20 - 50%

Consolidate = 50 - 100%

Note: on Equity Method only multiply % ownership by Net Income - disregard dividends paid

MCQ-00344

Question 9

What does translation do and when does it occur?

Answer 9

Step 1: Remeasurement - restate FS to functional currency

Step 2: Translation - restate FS from functional currency to the reporting currency

MCQ-07396

Question 10

Under the allowance method for recognizing bad Debt expense, the allowance would decrease when:

Answer 10

Specific Uncollectible account is written off

If an account previously written off is collected, this would increase the Allowance account (Dr-Cash, Cr-Allowance)

MCQ-00276

Question 11

True or False: Forwards contacts have standardized notional amounts

Answer 11

False

Forward contracts are negotiated privately between two parties without a clearinghouse

Future Contracts are standardized

MCQ-07963

Question 12

What is a liability in a general fund FS?

Answer 12

An amount to be paid from current financial resources

MCQ-08730

Question 13

MAC-GRaSPP & SCARE

Answer 13

Modified
Accrual
Current Financial Resources Measurement Focus

SE
CIPPOE
Accrual
Record Non-Current Assets and Liabilities
Economic Resources Measurement Focus

Question 14

What is the difference between Gross and the Net method for Sales discounts?

Answer 14

Gross - record entire sale and have a contra-acct called Sales Discount

Net - adjustment is not needed, however if a discount is not taken the revenue acct must be credited

F3-M2

Question 15

JE for Allowance method to restore an account previously written off?

Answer 15

Step 1:
Dr - AR
Cr - Allowance for Uncollectible

Step 2: record cash received
Dr - Cash
Cr - AR

F3-M2

Question 16

In acquisition accounting state the consolidating wp elimination entry:

CARINBIG

Answer 16

Dr Ccommon Stock - Sub
Dr APIC - Sub
Dr - Retained Earnings - Sub
Cr - Investment - Sub
Cr - Noncontroling Int
Dr - BS adjustment to Fair Value
Dr - Identifiable intangible Fair Value
Dr - Goodwill

Question 17

What is the test for Impairment Loss:

Answer 17

Step 1: Is the CV greater than the Undiscounted Cash Flows? If yes, go to step 2

Step 2: Subtract FV from CV = Impairment Loss

Question 18

ABC Corp uses the direct method to prepare its Stmt of Cash Flows, what would affect the reported Operating Cash Flow?

Answer 18

Decrease in Deferred Tax Liability

MCQ-00882

Question 19

What is true about Goodwill amortization for FS purposes?

Answer 19

It is NOT Amortized but is subject to an Impairment Test

MCQ-07544

Question 20

Fair Value Hierarchy:

Answer 20

1. Level 1 - Active and Identical
2. Level 2 - Quoted prices for Similar assets in Active Markets OR Quoted prices for Identical Assets in Non-Active Markets
3. Level 3 - Unobservable / Future cash flows and discount rate based on the best available Info.

MCQ-12648