Deck #5 (F2)

Question 1

When is management required to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern?

Answer 1

within on year after issuance

Question 2

When should management report their evaluation of going concern? What should the report?

Answer 2

1. every interim and year end period

2. quantitative and qualitative factors

Question 3

Should management disclose going concern if there is substantial doubt of going concern? what if they have a well informed plan to mitigate factors?

Answer 3

Yes, and yes. If there is any substantial doubt it has to be disclosed under the going concern basis of accounting.

Question 4

When is liquidation basis of accounting used?

Answer 4

When liquidation is imminent within on year of the issuance date

Question 5

2 examples of recognized subsequent events? (recognize = record JE and disclose)

Answer 5

1. settlement of litigation (that arose before BS date)

2. loss on an uncollectible receivable (before BS date)

Question 6

What are examples of non recognized subsequent events? (non recognized = only disclose)

Answer 6

1. Sale of bond or stock
2. business combination
3. settlement of litigation (that arose after BS date)
4. loss of plant or inventory due to natural disaster or fire
5. loss on uncollectible receivable (after BS date)

Question 7

What is the subsequent event evaluation period?

Answer 7

through the date that the financials are issued (or available to be issues for privates)

Question 8

What is the definition of fair value from GAAP?

Answer 8

the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal (or most advantageous) market at the measurement date under current market conditions

Question 9

What 3 areas do not apply to GAAP’s FV definition?

Answer 9

1. share based comp
2. measurements based on or using vendor specific objective evidence
3. FV measurements for leases

Question 10

Fair value (transaction vs. transportation)

Answer 10

Fair value does not include transaction costs. It may include transportation costs.

Question 11

What is an orderly transaction?

Answer 11

Asset or liability is exposed to the market before the measurement date long enough for marketing actives. Not forced.

Question 12

What is a market participant?

Answer 12

buyers and sellers who are not related parties

Question 13

What is the principal market? what if there is not a principal market?

Answer 13

1. the market with the greatest volume or level of activity for the asset or liability
2. must use the most advantageous market

Question 14

What are the 3 valuation techniques?

Answer 14

1. Market - uses prices and other relevant information from market transactions involving comparable assets
2. Income - converts future amounts (PVFCF) to a single discounted amount
   Cost - uses current replacement cost

Question 15

level 1, level 2, level 3 inputs

Answer 15

1. quoted prices in active markets for identical assets
2. inputs other than quoted prices that are directly or indirectly observable
3. unobservable inputs

Question 16

An operating segment is a component IF:

Answer 16

1. engages in business activities from which it may earn revenues and incur expenses
2. operating results are regularly reviewed by chief decision maker
3. discrete financial info is available (traceable cash flows)

Question 17

Form 10-K? Deadlines for the form?

Answer 17

1. Annual report for registered companies
2. large accelerated (60 days, greater than $500M)
3. accelerated (75 days, between $75M an $500M)
4. all others (90 days, less than $75M)

Question 18

Form 10-Q? Deadlines for the form?

Answer 18

1. Quarterly report for registered companies
2. large accelerated and accelerated (40 days)
3. all others (45 days)

Question 19

Form 11-k?

Answer 19

employee benefit plans

Question 20

Form 20-F?

Form 40-F?

Answer 20

1. 20-F is the 10k for non US companies

2. 40-F is the 10k for Canadian companies

Question 21

Form 6-k

Answer 21

Semiannual report for private issuers

Question 22

Form 8-k

Answer 22

filed for major events

Question 23

forms 3, 4, and 5

Answer 23

filed by directors, officers, or owners of more than 10% class