Deck21 Flashcards
Would firms rather report a Liability as a NonCurrent Liability or a Current Liability?
NonCurrent - because it makes them appear more liquid
To push a CL back to a NCL on balance sheet, the company must show what two things?
(1) It intends to refinance (2) Its ability to refinance (Intent and Ability)
Deferred Tax Liability is considered Current or NonCurrent based on what?
The classification of the Asset to which it is attached? (Current Asset, PPE, etc.)
If a CL gets refinanced into a NCL how is it reported?
As a NCL with a disclosure note.
Gains and Losses from retirement of Debt are reported where?
Continuing Operations
For troubled debt restructure type 2, what type of gain is recognized by the debtor?
No gain - None recognized under type 2.
Preferred Stock can be what 3 things?
Callable, Redeemable, or Convertible
Is Income ever increased or decreased from treasury stock transactions?
No - these transaction s are between the firm and their owners. A firm can’t profit from its owners.
Under the Cost Method, when treasury is reissued at a price higher than its cost, what account is credited for the difference?
Additional Paid in Capital
For Treasury Stock, does the cost method ever effect Retained Earnings?
No
When treasury stock is canceled(retired), the common stock is reduced by what?
The par value of the common stock canceled.
What condition must exist for Impairment Loss to be recognized?
The Book Value is Greater than the Recoverable Cost (You won’t be able to recover what the asset is on the books for)
Of an enterprises financial statement, it will provide information about (a) enterprise (b) management (c) both
(a) enterprise - the financial statements do not provide direct information about management.
When an inventory in year one, counterbalances in year two this means:
A prior period adjustment is recorded if the error is discovered in year two. (Is done to beginning retained earning that were overstated because of the inventory error)
For Financial Statement Disclosures when Fair Value is used, they must:
(1)Provide info for each major category of assets/liabilities and (2)be in interim and annual financial statements
