F1 Flashcards
How do you calculate GP for percentage of completion method?
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
% of completion: JE for recording costs and type of accounts
Dr. CIP (Inventory)
Cr. Cash
% of completion: recording billings on contract
Dr. Contracts receivable (AR)
Cr. Progress billings (contra-inventory)
% of completion: record payments
Dr. Cash
Cr. Contracts receivable
% of completion: record revenue/cost during construction period
Dr. CIP (filler)
Dr. Construction Expense (same as CIP from above)
Cr. Revenue (% x contract price)
Adjusting JE for a specific bankrupt client
Dr. Allowance for Doubtful Accounts
Cr. AR
Adj JE for bad debt % of sales/ AR method
Dr. Bad Debt Expense
Cr. Allowance for Doubtful Accounts
*make sure you account for updated AR/Sales from previous Adj JE
Summary of significant accounting policies includes:
- Measurement bases used in preparing FS
- Specific accounting principles/methods used in prep. FS (Deprc/amort, estimates, consolidation. inventory pricing, revenue rec. issues)
- criteria for determining which investments are treated as cash equivalents
things summary of significant accounting polices doesn’t include
- details of account balances
- changes in accounting principles
- dates / maturity for LT debt
- yearly computation of deprecation depletion and amort.
Type of notes that make up the FS
Material Info Changes in Equity required marketable securiteis FV estimates contingency losses
T/F Disclosure of an entity’s major products or services and its principle markets are required
True
What does IFRS require as disclosure but not GAAP
Stmnt of compliance w/ applicable accounting principles and disclosure of judgements made in the preparation of the FS
Level 1 inputs
quoted prices in active markets for identical A/L
Level 2 Inputs
quoted prices in active markers for SIMILAR A/L
Level 3 Inputs
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
Principal Market
Mrkt with the greatest volume of activity for the particular asset for which the FV is being determined
Most Advantageous market
market with the highest price in absence of a principal market
For separate reporting segments - what should a public company disclose about revenue
disclose separately the amount of sales to unaffiliated customers and amount of intracompany sales
what is a required enterprise-wide disclosure regarding external customers
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
what is a required enterprise-wide disclosure regarding external customers
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
Does the 10% rule for a segments combined assets and liabilities for all operating segments?
NO just for assets
Are both sales to unaffiliated customers and intersegment sales considered when determining if an industry segment is a reportable segment
YES
10 % rule for operating segments are
10% of:
- combined revenues
- operating profit
- identifiable assets
