F1 Flashcards
Comprehensive income includes:
all changes in equity during a period except those resulting from owner investments and distributions to owners
unrealized gain on available for sale debt security is reported in
other comprehensive income
The earliest period that a component of an entity can be reported in discontinued operations is when the component meets the following “held for sale” criteria:
1 Management commits to a plan to sell the component.
2 The component is available for immediate sale in its present condition.
3 An active program to locate a buyer has been initiated.
4 The sale of the component is probable and the sale is expected to be completed within one year.
5 The sale of the component is being actively marketed.
6 It is unlikely that significant change to the plan to sell will be made or that the plan will be withdrawn.
Discontinued operations is shown
net of tax
The company has the choice of reporting the components of OCI on either an:
individual net of tax basis or each component on a before tax basis with one amount shown after for the aggregate tax effects
What is an 8-K
is a form required to be filed by all companies registered with the Securities and Exchange Commission (SEC). The form reports on major corporate events, including corporate asset acquisitions/disposals, accountant changes, financial statement changes, management changes, changes in securities, etc.
Stock dividends and stock splits require
restatement of the shares outstanding before the stock dividend or stock split. Thus, the stock dividend would be treated as if it had occurred at the beginning of the fiscal year.
When calculating basic earnings per share, preferred dividends
accumulated during the period on cumulative preferred stock or preferred dividends declared during the period on noncumulative preferred stock must be subtracted from net income to calculate the income available to common shareholders, which is then divided by the average common shares outstanding.
basic EPS formula
income available to common shareholders / weighted average number of common shares
out of money stock option
are antidilutive because the exrcise price exceeds the market price of the stock
An accelerated filer must file 10-k within
75 days
preferred shares are NOT
included in the EPS calculation
Rule: all potentially dilutive convertible bonds and preferred stock
are used in computing diluted EPS
Cumulative preferred stock dividends are
- paid on par value (not sale price) of preferred stock
-have a preference over common stock dividends until all past P/S div is paid
Gains of stock issuance are record by
increasing APIC
Losses from stock issuance/reissuance are recorded by
first eliminating any balance in APIC and then decreasing R/E
Contingent shares (if dilutive) are:
Included in the calculation of basic EPS if all conditions are met.
When computing discontinued operations you include: (for year when discontinued operations hasn’t sold)
- Loss from operations
2 Impairment loss (BV - FV)
If a company operates in an industry that is not subject to seasonal fluctuations which balance sheet periods are required to be included on the Form 10-Q?
- the most recent quarter
- The end of the preceding fiscal year
Treasury stock gain does not mean
Treasury Stock - APIC
it means gain on income statement- which you never put TS gain or losses on IS
Additional Shares Outstanding Formula
Number of Shares - (Number of Shares x Exercise Price / Average Market Price)
The treasury stock method assumes that options proceeds can be used to:
reacquire new shares on the open market
Rule:The difference between book value and fair market value of the property dividend should be
recorded as gain/loss on disposal of asset.
when a stock dividend happens (less than 20-25% of stock outstanding) transfer the
FMV of the stock dividend at declaration date from R/E to C/S and PIC
Gains and losses from changes in fair value of foreign currency transaction hedges classified as fair value hedges are accounted for
in earnings as are other fair value type hedges.
Gains and losses from changes in the fair value of foreign currency transaction hedges used to hedge a net investment in a foreign operation are reported in
other comprehensive income as part of the cumulative transaction adjustment.
If certain natural disasters are frequent then :
the damage is not considered unusual and damages should be shown in continuing operations with no disclosure needed
Dividend income is included in:
continuing operations section of Income statement
A foreign receivable will generate a foreign exchange gain when :
The foreign currency increases in value
A foreign currency payable will generate a foreign exchange gain when:
The foreign currency decreases in value.
Does common stock and APIC increase whenever a company issue rights without consideration to existing shareholders?
No, common and APIC only increase whenever the right are exercised and stock is issued.
Interest expense (net of income tax) on debt considered would be added back to the numerator for diluted EPS if
the effects are dilutive.
a stock split increases
the number of shares
whenever a firm repurchases common stock, what happens to the debt to total capital ratio?
It increase’s
preferred stock that is nonconvertible is
not considered in the calculation of eps
stock dividend -
distributions to stockholders of the corporations own authorized but unissued shares.
When a stock dividend is declared it is
transferred from retained earnings to capital stock and apic accounts AT fair value
stock splits
has no change to total value of equity only the number of common stock shares
so if you do 2-for-1 stock split
its the 2x100000= 200000 common stock
when calculating the new par value use par value not the fv
all deferred tax liabilities are classified as
non-current liabilities
purpose of comprehensive income is to
summarize all changes in equity from nonowner sources
stock dividends and stock splits are NOT considered
income to the recipient
When stock is donated does it decrease stockholder equity
no because there is no cost to the corporation
The difference between book value and fair market value of the property dividend should be recorded as a
gain/loss on disposal of asset.
