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FAR > F1- Conceptual Framework and Financial Reporting > Flashcards

F1- Conceptual Framework and Financial Reporting Flashcards

1
Q

Fundamental Qualitative Characteristics

A

Relevance and Faithful Representation

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2
Q

Elements for Relevance

A

Confirmatory Value, Materiality, Predictive Value

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3
Q

Elements of Faithful Representation

A

Completeness, Neutrality, Free from error

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4
Q

Nonbusiness organization financial statement users

A

resource providers, constituents, governing and oversight bodies, managers

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5
Q

Elements of recognition for financial statements

A

measurability, relevance, reliability

Recognition= R= RRM

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6
Q

Elements of assumptions for financial statements

A

entity, going concern, monetary unit, periodicity

End Going Cus My Uncle Payed

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7
Q

Elements of principles of financial statements

A

measurement, revenue recognition, expense recognition, full disclosure

Measure revenue right expense right fully

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8
Q

Unexpired Costs (Asset)

A

Inventory, prepaid insurance, nbv of fixed assets, unexpired cost of patents

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9
Q

Expired Costs (Expense)

A

COGS, insurance expense, depreciation expense, amortization

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10
Q

Gross

A

revenues and expense

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11
Q

Net

A

gains and losses

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12
Q

Consideration payable to the customer

A

reduce transaction price

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13
Q

In a transaction price and there is significant financing… it is recognized at?

A
  • PV

- Less than 1 yr then discount is unncessary

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14
Q

Transaction price and noncash consideration is recognized at?

A

FV at contract inception

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15
Q

How is revenue recognized if there is multiple performance obligations?

A

As the entity satisfied each performance obligation

Satisfied over time: annual services, subscriptions

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16
Q

Revenue at a point of time has what characteristics?

A

right to payment, customer has legal title, transfer of possession of the asset, customer has significant rewards and risks of ownership, customer has accepted the asset

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17
Q

Deferred Revenue

A

paid but service not performed (liability until performed)

18
Q

Accrued Revenue

A

did the service but haven’t been paid yet

19
Q

Incremental costs of obtaining a contract

A

Capitalize if would not have occurred if contract was not obtained

Ex: legal fees to draw up the contract, sales commissions

20
Q

Costs to fulfill a contract

A

Capitalize: DM, DL, MOH
Expense: Selling (advertising), general, administrative expenses

21
Q

Warranties with revenue recognition when the customer has the option to purchase the warranty separately

A

allocate a portion of the overall transaction price when there is a distinct service and performance obligation satisfied

22
Q

Warranties with revenue recognition when the customer doesn’t have the option to purchase the warranty separately

A

There is no performance obligation if:
Law requires warranty
Shorter coverage period
Must perform specific tasks

23
Q

Refund liability

A

A liability that the entity does not expect to be entitled to receive

24
Q

Long-term construction contracts- percentage of completion method (accounts)

A

construction in progress- inventory (asset)
progress billings- contra inventory (credit)
estimated loss- recognized immediately in the year it is discovered

25
Q

completed contract method- accounts and rule

A

construction in progress- inventory
billings in progress- contra inventory
no gross profit recognized until contract is completed
losses recognized in full year they are discovered

26
Q

Long term contracts

If sum of cumulative costs incurred + cumulative gross profit exceeds cumulative billings…

A

excess reported as current asset

27
Q

Income statement: discontinued operations- items reported

A
  • impairment loss
  • g/l from actual operations
  • g/l on disposal
28
Q

Something is considered a component of an entity if…

A

operations and cash flow are clearly distinguished

ex: operating segment, reportable segment, reporting unit, subsidiary, or asset group

29
Q

Component is considered held for sale if all…

A
  • management commits to sell
  • available for immediate sale
  • active program to locate buyer
  • sale is probable & expected to be completed within 1 year
  • actively marketed
30
Q

Types of entities to be considered for discontinued operations

A

been disposed of or classified as held for sale

31
Q

Conditions to be met for an entity to be considered a discontinued operation

A

strategic shift

  • disposal of a major geographical area
  • disposal of a major equity method investment
  • disposal of a major line of business
32
Q

Calculation of impairment loss of a discontinued operation

A

CV - NRV (sp - disposal)

33
Q

Subsequent increases in FV of a component classified as a discontinued operation

A

reversal allowed but not in excess of the previously recognized cumulative loss

34
Q

Discontinued operations- depreciation & amortization

A

once decided to dispose (or already disposed of), no depreciation or amortization recorded

35
Q

Anticipated future gains or losses of a discontinued operations component

A

loss: recognized
gain: not recognized

36
Q

Changes in accounting estimate (recognition, events, reporting)

A

prospective

  • useful life change (depreciation)
  • adjustment of salary accrual
  • settlement of litigation
  • to LIFO
  • includes discontinued operations estimate changes
  • CY earnings and future periods
  • disclose the future effect in the notes unless inventory estimate
37
Q

Changes in accounting principle (recognized, events, calculation, reporting)

A
  • retrospective
  • GAAP to GAAP
  • in noncompartive bs: beg re in period of change
  • in compartive bs: beg re in the first period presented
  • exceptions to princple- to LIFO and depreciation method
38
Q

Change in accounting entity (recognition, event, reporting)

A
  • retrospective
  • consolidation
  • in noncomparative bs: beg re in earliest period presented
  • in comparative bs: previous years affected restated
39
Q

Error correction (recognition, events, reporting)

A
  • prior period adjustment
  • oversight, mathematical mistakes, non- GAAP to GAAP (cash to accrual)
  • in noncomparative bs: beg re in earliest period presented
  • in comparative bs: previous years affected restated or beg re in earliest period presented
40
Q

Elements of comprehensive income

A

net income

  • income from continuing operations
  • discontinued operations

OCI- PUFIE

  • Pension adjustment
  • Unrealized g/l on AFS debt securities
  • Foreign translation adjustments
  • Instrument specific credit risk
  • Effective portion of cash flow hedges
  • should NOT be reported on a per share basis*
  • excluded owner distributions- dividends paid to shareholders*
41
Q

How will OCI be reported for interim period reporting

A

reported in total

42
Q

Required disclosures for OCI Statement

A
  • tax effects of each component
  • changes in the accumulated balances of each component (on the face or in the notes)
    • total AOCI on bs as equity
  • reclassification adjustments to avoid double counting in NI

FAR (1 decks)

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