Deck 17 Flashcards
Valuation allowance
This will be recognized when it is more likely than not (50%) that part or all of the DTA will not be realized (not allowed under IFRS)
Required adjustment for deferred taxes =
Ending balance - current balance
DTA and DTL under IFRS are always recorded as:
Noncurrent
A gain occurring from a sale/leaseback should be reported as an:
Asset valuation allowance
Future tax deductions result in (Ex: allowance for doubtful accounts):
Deferred tax asset
Future taxable income results in (Ex: unrealized G/L on trading)
Deferred tax liability
Deferred tax asset is more likely than not, not to be realized; what occurs?
Increase tax expense and decrease the asset (increase valuation account)
Interest cost for pension plans =
Beginning PBO x Discount rate
Liquidating dividend =
Total cash dividend declared minus retained earnings
How does the exercise of stock rights effect RE and NI?
Increase RE but no effect on NI
Calculate common shares outstanding:
Common shares outstanding - treasury shares purchase + treasury shares reissued (does not includes the shares of convertible preferred stock)
Which has preference over the other? (Common or preferred stock)
Preferred stock (pay first)
Treasury stock gains and losses are recorded as:
Direct adjustments to stockholders equity (APIC); no effect on income statement
Book value per common share =
Common stockholder’s equity/ common shares outstanding
Equity instruments issued for employee services are to be valued at what date:
Date of Grant
Compensation expense is calculated on what date?
The grant date and recognized over the service/vesting period
Intrinsic value of call option =
of share options x (market price of stock grant date less exercise price of the share option)
Common shareholders’ equity =
Total equity - preferred stock outstanding - cumulative preferred dividends in arrears
Change in retained earnings =
Net income/loss - dividends declared +/- prior period adjustments +/- changes reported retrospectively + adjustment from quasi-reorganization
Purpose of appropriating retained earnings:
To disclose to shareholders that some of the retained earnings are not available to pay dividends
