F1 Flashcards
Types of Accounting Treatment for Changes in:
- estimate
- principle
- entity
- error correction
- estimate = prospective
- principle = retrospective
- entity = retrospective
- error correction = prior period adjustment/restate
Two Exceptions to Change in Principle
- change in depreciation method (prospective)
2. change to LIFO (no records will exist; prospective)
Non-owner Transactions
- everything except for things relating to stocks & dividends
- shareholders = owners
How is OCI and the resulting AOCI presented?
net of tax
Does comprehensive income have EPS?
no
Two options for Comprehensive Income
- single statement with NI
2. separate statement
Where is the tax benefit/expense from OCI items showed?
*on the face of the statement or in the notes
Reportable Segment Requirements
10% of
- assets
- profit (separate out losses in separate column)
- revenue (do not eliminate intercompany transactions)
*must have 75% of external revenues
75% Test
*relates to segments; must report at least 75% of external revenues
First Time Adoption of IFRS Requirements
3 years of balance sheets
2 years for everything else
What tax rate should be used at the interim date?
the enacted rate that will apply
Presentation of Financial Statements under GAAP
2 years balance sheet
3 years for cash and income
Do you report items when they are recognized or realized?
realized AND recognized
What does the Joint Framework establish?
- it establishes a common set of objectives and concepts
* does NOT establish GAAP
When is an Accounting Standards Update issued?
*when it has been approved by a majority of the members of FASB
5 Elements of Establishing Present Value
- estimate of future cash flow
- expectations about timing variations of future cash flows
- time value of money
- price for bearing uncertainty
- liquidity issues and market imperfections
Fundamental and Enhancing Characteristics
Relevance (Passing Confirms Money)
- predictive value
- confirmatory value
- materiality
Faithful Representation (Completely Neutral is Free From Error)
- completeness
- neutrality
- free from errors
Enhancing
- comparability/consistency
- verifiability
- timeliness
- understandability
Two Underlying Assumptions under IASB
- accrual accounting
2. going concern
When can an exposure draft be issued under IASB?
*it must be approved by at least nine members of the IASB
What type of expense is freight out?
a selling expense
When are cumulative changes made?
*at the beginning of the year no matter when they were made in the current year
What must a discontinued operation be deemed as?
held for sale
Do purchase discounts affect inventory and COGS or revenue?
inventory and COGS
Do prior period adjustments appear on the income statement?
no
Change in estimating bad debts is accounted for?
prospectively
Can you capitalize organizational costs?
no
Is comprehensive income reported on interim financials?
yes
Are trading securities reported in income or comprehensive income?
income
What is the purpose of comprehensive income?
To explain ALL changes in equity from non-owner transactions
Purpose of financial notes?
provide disclosures REQUIRED by GAAP
Would loans to officers and key management compensation require disclosure under IFRS?
yes
Are intercompany sales related party transactions?
no
Related Party Disclosure Requirements
- amount due
2. amount during the year
What should you disclose in relation to a large investment in a subsidiary?
*the method used to account for the investment
What is a required disclosure for segment reporting?
*disclosure of an entity’s major products or services and markets
Interim reports are ______ parts of an annual period
integral
When estimating tax for the interim, use ________
the rate that would be effective in the entire year
Inventory Losses and the Interim
- expected to recover = no record
- not expected to recover = book in fourth period
- permanent decrease = record in interim period
Should discontinued operations and extraordinary items be recorded at interim dates?
yes
Should significant estimates be made when it is reasonably possible that they will change in the near future?
no
Do unaffiliated and intercompany sales need to be disclosed?
yes, separately
Should unallocated expenses be included in the segment’s income statement?
No, it specifically has to be allocated by the CFO
Disclose customers who provide more than
10% of ALL revenues (not just segment revenues)
Segments must report to __________ to be considered a segment
the CFO
Which companies are required to report on segments?
only public companies
Is segment cash flow reported under IFRS?
no
Date of transition to IFRS will be shown on ______
the earliest statement shown
Where do all adjustments for going to IFRS go?
directly to R/E in the first period
IFRS equivalent of Balance Sheet
*statement of financial position s
SEC Filing Due Dates
10-K
- large company accelerated: 60 days
- accelerated: 75 days
- non-accelerated: 90 days
10-Q
- large accelerated: 40 days
- others: 45 days
Without fluctuations, a form 10-Q should include balance sheets from
*the end of the preceding fiscal year
Usually need a __________ to accompany a cash flow statement for a recent fiscal quarter
*complete fiscal year comparison
XBLR has modified liability for
24 months from the time the filer is required to file
Two Types of Segments that cannot be Reportable Segments
- headquarters
2. pension plan
Discontinued Operations and Extraordinary Items are presented
NET OF TAX
