Deck 2 Flashcards
What is the formula to calculate impairment loss
Book Value minus Fair Market Value of assets or liabilities
What type of revenue is excluded or separately reported from “revenues”
revenues from discontinued ops but it is included in comprehensive income
what is comprehensive income?
summary of all changes in equity from non-owner sources. Dividends and investments from owners are not included
how is a change in accounting principal reflected? example, fifo to weighted average
as an adjustment to beginning retained earnings
What is included in AOCI? (in the balance sheet not income statement)?
what is included in the cost of cosigned inventory?
cost of inventory+any costs ready to get it ready for sale.
If 70% of inventory was sold, only 30% remains at the end of the year based on original cost.
how is interest revenue calculated on a note payable?
Total payments(monthy payment * number of years) less principal paid at the present value =interest revenue
where should the depreciation method used be reflected in the financials?
in the summary of significant accounting policies
how is a finance lease recorded and calculated on the sellers/lessee books when leasing back? (sales type lease)
sale price-fair value=financing liability
Cash
A/D
asset at cost x
financing liability x
g/l
how is a 70% owned sub’s cash dividend affect RE and NCI in consolidated financials?
no effect to RE
NCI decreases by 30% of the dividend
parent balance sheet will have 70% of sub’s earnings the dividend would be eliminated but the NCI would be reflective
what are the two items for the bank cash balance?
add deposits in transit
subtract outstanding checks
how are cash receipts calculated on a bond issuance?
Sales price=20010001.03=206,000
add accrued interest=face amount of 200,000*.09 stated rate * bond date to issue date 2/12=3,000
less bond issuance costs
=199,000
Cash 199,000
Bond issue costs + premium 40,000
Bond payable(face value) 200,000
Interest payable 3,000
what is the amortization rule for intangible assets?
amortize over the lessor of the economic useful life or the legal life
do not include dividends in determining what?
net income. Only include dividedn in retained earnings or investment account
how is interest expense(net of tax) used in EPS?
added back from dillutive if the effects are dillutive, ignored for basic
how does a lessee record depreciation expense on a finance lease?
PV of min lease payments/lease term=SL dep. expense
**record JE for amortization expense of a lease
name the 4 criteria to record employee compensation expenses for future absences to be accrued
1) vested/accumulated
2) payment is probable
3) reasonably estimated
4) services already rendered
how do treasury stock transactions affect total equity and book value?
decreases equity acquired at a price less than book value
book value per share is increased
ex: 1000/100= 10 vs 920/90= 10.22
what is the journal entry to record declaration of a dividend?
Retained earnings
Dividends payable
what is the journal entry to record shares issued?
Cash (price/share * number of shares issued)
Common stock (number of shares issued * par value)
APIC (Plug or number of shares issed* (diff between par and issue price)
JE for a treasury stock purchase
Treasury stock (par value* number of shares purchased)
APIC( APIC price or diff between par and issue price * number of shares purchased)
Retained Earnings (PLUG)
Cash (purchase price* number of shares purchased)
JE to record reissued shares held in treasury stock
Cash (purch price* number of shares reissued)
Treasury stock (par price* number of shares reissued)
APIC (plug)
how should capitalized equipment be amortized in a lease?
use estimated useful life of asset
BUT if there no title transfer or bargain purchase, use life of lease
how do gains and losses from treasury stock purchases and resales affect retained earnings and APIC?
gains increase APIC
losses decrease existing APIC to zero, therefore reducing RE
