F 1 Flashcards
Who besides FASB has legal authority to establish GAAP? Who is the current standard-setting body in the US? What is the single source of authoritative nongovernmental US GAAP?
- SEC
- FASB
- Accounting Standards Codification
What did the Financial Accounting Foundation (FAF) create? Why did they create it? Where are these alternatives located?
- The Private Company Council (PCC)
- To establish alternatives to GAAP to make F/S more relevant, less complex, and less costly
- ASC
Who created the PCC?
Financial Accounting Foundation (FAF)
Who created IFRS?
International Accounting Standards Board (IASB)
What did the IASB and FASB begin working on in 2002? What has happened since then? What has the SEC said?
- Convergence
- Many joint projects discontinued, each board doing its own thing
- Haven’t announced anything. One initiative is single worldwide reporting and considering if it’s achievable. Doesn’t mention IFRS.
What is the FASB conceptual framework? How are pronouncements set forth?
- Is basis of all FASB pronouncements. Set forth in Statements of Financial Accounting Concepts (SFAC). SFAC is not GAAP, but provides a basis for accounting concepts (basic reasoning)
- As a chapter in SFAC No. 8, Conceptual Framework in Financial Reporting
What is the IASB conceptual framework?
Describes the basic concepts behind F/S. Is not an IFRS
What are the Fundamental Qualitative Characteristics of useful financial information and what makes them up?
Relevance:
- Predictive Value
- Confirming Value (Provides feedback)
- Materiality
Faithful Representation
- Completeness
- Neutrality
- Freedom from Error
What is the A in IDEA and what is made up of?
Change in:
- Estimate - Prospective
- Principle – Book to RE 1st year shown (Unless impractical – “To LIFO/Chg. Depr.” – then prospective)
- Entity – Restate all years shown (IFRS doesn’t have this concept)
- Error Corrections – Restate – Adj. RE if year not presented
What’s included in accounting for Discontinued operations?
- Gain/loss of current ops
- Gain/loss on sale
- Impairment Loss (Component – US; Individual IFRS)
- Assets no longer depr. Or amort
- Liab. For Exit or disposal costs if obligating event occurs (at FV)
- Future operating losses recognized in period incurred
What is PUFER?
- Pension adjustments
- Unrealized gains and losses on AFS securities
- Foreign currency translation items
- Effective portion of cash flows hedges
- Revaluation surpluses (gains) recognized when intangible assets and fixed assets are revalued under IFRS
A reportable segment exists if it meets one of three tests:
- Ten percent of combined revenues to internal and external parties
- Ten percent of the greater of reported profit or loss (NOT ELIMINATED INCOME) (as an absolute amount).
- Ten percent of the combined assets of all operating segments.
What is the 75 percent reporting sufficiency test?
A “catch all” requirement that may require identification of additional segments to attain the 75 percent level. This test requires that reportable segments total at least 75 percent of revenue from external parties.
What is the filing deadlines for Form 10-K?
- 60 days after YE for large accelerated filers
- 75 days after YE for accelerated filers
- 90 days after YE for all others
What is the filing deadlines for Form 10-Q?
- 40 days after QE for large accelerated filers and accelerated filers
- 45 days after QE for all others
What SEC regulation outlines the form and content for interim and annual F/S to be filed with the SEC?
Regulation S-X • Audited if Annual • 2 BS • 3 IS • 3 CF
Are IC transaction eliminated for segment reporting?
No
What are all the major required SEC Forms?
- 10-K
- 10-Q
- 11-K (Employee Benefit Plan Report)
- 40-F (Like 10-K for Canadian in US)
- 20-F (Like 10-K for Foreigner in US)
- 6-K (Filed Semi-annually for foreign private issuers, like 10-Q)
- 8-K (Major Changes)
- 3, 4, & 5 (Directors, Officers, Owner more than 10%)
Name the 5 elements of PV measurement in SFAC No. 7 (UVOTE)
Uncertainty, the price for bearing
Variations, expectation about timing of FCF
Other Factors (Liquidity issues and market imperfections
Time value of money
Estimate of FCF
What are the Enhancing Qualitative Characteristics of useful financial information that is relevant and faithfully represented?
- Comparability (Consistency)
- Verifiability (2 people come to same)
- Timeliness
- Understandability
Who are the various standard setters (other than SEC) that add to the FASB ASC? (FEDPRIA)
- FASB
- Emerging Issues Task Force
- Derivative Implementation Group
- Accounting Principles Board
- Accounting Research Bulletins
- Accounting Interpretations
- AICPA
What SEC standards are included in the ASC? (Regulation For Accounting I S Emerging)
Regulation S-X Financial Reporting Releases Accounting Series Releases Interpretative Releases Staff Accounting Bulletins EITF
Who are the primary users of general purpose financial statements?
Existing and potential investors, lenders, and other creditors.
What are the Fundamental Assumptions of US GAAP?
- Entity
- Going Concern
- Monetary Unit
- Periodicity
- Historical Cost Principle
- Revenue Recognition Principle (Earned & Realized/Realizable)
- Matching Principle
- Accrual Accounting (Record Rev. & Exp w/ no exchange of cash)
- Full Disclosure Principle (The Notes for “Completeness”)
- Rule of conservatism
List out the Multi Step Income Statement
Net Sales Cost of Sales GM Selling Expenses G & A Expenses Depreciation Expense = Income (loss) from operations Other Revenues & Gains: Interest Income Gain on Sale of Fixed Assets Other Income Other Expenses & Losses: Interest Expense Loss on Sale of Fixed Assets =Income before unusual items and income tax Unusual OR Infrequent Item: Loss on sale of AFS securities =Income before Income Tax Provision for income taxes: Current Deferred =NET INCOME (Income from continuing operations)
Is a loss from a major unexpected devaluation of a foreign currency considered extraordinary?
No
