Deck23 Flashcards
When Collections are in doubt, the most conservative Income Recognition method is what?
The Cost Recovery Method - it recognizes no income until the cash exceeds the cost of the equipment
What is Deferred Gross Profit?
Gross Profit remaining on uncollected sales accounted for under the installment method.
When is the effect of estimated returns recognized?
Month of Sale
Under IFRS, for long term contract revenue recognition, what should be used when Percentage-of-Completion method is not appropriate?
Cost Recovery Method
What is a disadvantage of the Periodic Inventory System?
The COGS amount used for Financial Reporting includes both the Cost of Inventory Sold and the Inventory Shortages.
Under the Equity Method of Accounting for Investments in Common Stock, is market value taken into consideration when reporting Investment Income?
No - under the Equity Method, the Investor’s share of the reported Income is used.
Under the Equity Method of Accounting for Investments, are dividends counted as Income?
No - they are a Debit to Cash and Credit(Reduction) in Investment in X Company.
If an investor can exert Significant Influence over and Investee, which method of Accounting should be used?
Equity Method - don’t claim dividends. Recognize % of the investee’s income
Which of these two is not an Other Comprehensive Basis for Income?(a)Pure Cash Basis (b)Pure Accrual Basis
(b)Pure Accrual Basis
The quality of information that increases the likelihood of forecasting past or present events is called:
Predictive Value
For a Joint Venture, and Investor should record its investment at (a) Carrying Value (b) Fair Value
Carrying Value
Which concepts are used in preparing Personal Financial Statements? (a)Accrual Accounting (b)Fair Value Measurement (c) Both
(c) Both
Is Land “Held for Sale” considered Plant, or a Current Asset?
Current Asset
When a firm is in Liquidation, should they value assets at Historical Cost or NRV?
NRV - at liquidation, historical cost is no longer relevant.
If a company has a Defined Benefit Plan for their employees, it should report a liability of what on its Balance Sheet?
Unfunded Projected Benefit Obligation
For Pensions, are Projected Benefit Obligations(PBO’s) and Plan Assets netted together on the Balance Sheet?
Yes - e.g. ($23 million (Plan Assets) - $20 milion (PBO’s)) would report a $3 million asset.
Defined Benefit Plan Investments are reported on the Balance sheet at:
Fair Value
As far a disclosures of a Defined Benefit Plan, are estimates of future contributions required?
No - just (1)description of plan (2) amount of pension expense by component and (3) weighted average discount rate
What is PBO(Pension Benefit Obligation)?
Pension Plan Assets - Pension Liabilities (Could be either positive or negative)
What is the equation for Pension Expense?
Service Cost + Interest Cost - Expected Return = Pension Expense
