F1

Question 1

How do you calculate GP for percentage of completion method?

Answer 1

Step 1: Contract Price - Total estimated cost of contract = Total Gross Profit
*Note: If they do not give you total estimated cost then you can get it by adding cost incurred to date * estimated costs to complete

Step 2: Total Cost incurred to date / total estimated cost of contract

Question 2

% of completion: JE for recording costs and type of accounts

Answer 2

Dr. CIP (Inventory)

Cr. Cash

Question 3

% of completion: recording billings on contract

Answer 3

Dr. Contracts receivable (AR)

Cr. Progress billings (contra-inventory)

Question 4

% of completion: record payments

Answer 4

Dr. Cash

Cr. Contracts receivable

Question 5

% of completion: record revenue/cost during construction period

Answer 5

Dr. CIP (filler)
Dr. Construction Expense (same as CIP from above)
Cr. Revenue (% x contract price)

Question 6

Adjusting JE for a specific bankrupt client

Answer 6

Dr. Allowance for Doubtful Accounts

Cr. AR

Question 7

Adj JE for bad debt % of sales/ AR method

Answer 7

Dr. Bad Debt Expense
Cr. Allowance for Doubtful Accounts

*make sure you account for updated AR/Sales from previous Adj JE

Question 8

Summary of significant accounting policies includes:

Answer 8

1. Measurement bases used in preparing FS
2. Specific accounting principles/methods used in prep. FS (Deprc/amort, estimates, consolidation. inventory pricing, revenue rec. issues)
3. criteria for determining which investments are treated as cash equivalents

Question 9

things summary of significant accounting polices doesn’t include

Answer 9

1. details of account balances
2. changes in accounting principles
3. dates / maturity for LT debt
4. yearly computation of deprecation depletion and amort.

Question 10

Type of notes that make up the FS

Answer 10

Material Info
Changes in Equity
required marketable securiteis 
FV estimates 
contingency losses

Question 11

T/F Disclosure of an entity’s major products or services and its principle markets are required

Answer 11

True

Question 12

What does IFRS require as disclosure but not GAAP

Answer 12

Stmnt of compliance w/ applicable accounting principles and disclosure of judgements made in the preparation of the FS

Question 13

Level 1 inputs

Answer 13

quoted prices in active markets for identical A/L

Question 14

Level 2 Inputs

Answer 14

quoted prices in active markers for SIMILAR A/L

Question 15

Level 3 Inputs

Answer 15

FV measurement based on management assumptions and is only acceptable when there are no level 1 or 2 inputs or it would take undue cost / effort to find level 1 or 2

Question 16

Principal Market

Answer 16

Mrkt with the greatest volume of activity for the particular asset for which the FV is being determined

Question 17

Most Advantageous market

Answer 17

market with the highest price in absence of a principal market

Question 18

For separate reporting segments - what should a public company disclose about revenue

Answer 18

disclose separately the amount of sales to unaffiliated customers and amount of intracompany sales

Question 19

what is a required enterprise-wide disclosure regarding external customers

Answer 19

they must report segment information about a company’s major customers if that customer provides 10% or more of the combined revenue, internal or external, of all operating segements

Question 20

what is a required enterprise-wide disclosure regarding external customers

Answer 20

they must report segment information about a company’s major customers if that customer provides 10% or more of the combined revenue, internal or external, of all operating segments

Question 21

Does the 10% rule for a segments combined assets and liabilities for all operating segments?

Answer 21

NO just for assets

Question 22

Are both sales to unaffiliated customers and intersegment sales considered when determining if an industry segment is a reportable segment

Answer 22

YES

Question 23

10 % rule for operating segments are

Answer 23

10% of:

• combined revenues
• operating profit
• identifiable assets