Deck 6 Flashcards
If a non monetary exchange has commercial substance, the transaction is accounted for using:
The fair value of the asset received or asset surrendered, whichever is more evident
When a non monetary exchange has commercial substance, gain and losses are recognized based on:
Difference between FV and BV of the asset given up
If an exchange lacks commercial substance, the gain recognized is based on:
Boot received (loss is recognized always)
When would an exchange lack commercial substance?
1) No change in cash flows; or 2)FV can not be determined
When is an exchange considered a monetary exchange?
When boot received equals or exceeds 25% of the total consideration (gains/losses recognized in their entirety)
Difference between historic cost and current cost?
Current cost reflects appreciation while historic ignores it
Difference between nominal dollar and current dollar?
Current dollar reflects inflation while nominal dollar ignores it
What is the required basis for GAAP for measuring prices?
Historical cost/nominal dollar
Foreign currency transaction gains and losses are included in:
Operating income
Foreign exchange transaction gains and losses are included in:
OCI
Weighted average rate =
Use for income statement
Foreign currency translation
Restate financial statements from functional currency to reporting currency
Foreign currency remeasurement
Restate foreign financial statements from foreign currency to entity’s functional currency
Remeasurement method (temporal method)
“Dysfunctional” currency (need to remeasure to the functional currency); gain/loss - income statement
Translation method (current rate method)
“Functional” currency (need to translate to the reporting currency); gain/loss - OCI
Under income tax basis, nontaxable revenues and expenses may be reported as:
1) Separate line items; 2) additions and deductions to net income; or 3) note disclosure
Form 8-K reports:
Reports on major corporate events (does not show quarterly results, as those are shown in 10-Q)
A liability associated with an exit or disposal activity is only recognized when:
1) An obligating event has occurred; 2) Present obligation to transfer assets or provide services in the future; and 3)little or no discretion to avoid the future transfer of assets or providing of services
Change from LIFO to FIFO should be reported as a change to:
Beginning retained earnings
How are errors reported?
Change to beginning retained earnings in prior periods (debit to retained earnings)
