F1 Income Statement

Question 1

Disc Ops calc consists of

Answer 1

1. gain/loss from actual operations
2. impairment loss
3. gain/loss from disposal

Question 2

Held for sale criteria

Answer 2

1. mgt commits to a plan to sell component
2. component available for immediate sale in present condition
3. active programme to locate buyer has been initiated
4. sale of component probable and sale expected to be complete within 1 year
5. sale of component actively marketed
6. actions required to complete sale make it unlikely for significant changes or plan will be withdrawn

Question 3

conditions that must be present for disc ops

“gel”

Answer 3

1. eliminated from ongoing operations
2. no significant continuing involvement

disposal of major:
Geographic locations
Equity method investments
Line of business

Question 4

Disc Ops report in what period?

Answer 4

results of disc ops reported for current period and prior periods presented in period component either disposed of or held for sale

Question 5

measurement/valuation of component held for sale

Answer 5

measured at lower of carrying or fv less costs to sell

costs to sell are incremental direct costs to transact sale

Question 6

exit and disposal costs

Answer 6

1. involuntary employee termination benefits
2. costs to terminate a contract that isn’t a capital lease
3. other costs such as to consolidate facilities or relocate employees

Question 7

recognition of liability related to exit/disposal criteria

Answer 7

all must be met

1. obligating event has occurred (ie profits<budget)
2. event results in present obligation to transfer assets or to provide services in future
3. entity has little/no discretion to avoid future transfer of assets or providing services

recognize at fair value in period incurred

Question 8

4 types of accounting changes

Answer 8

1. changes in acct estimate (prospective)
2. changes in acct principle (retrospective)
3. changes in acct entity (restate)
4. error correction (restate)

Question 9

change in accounting estimate

Answer 9

1. changes in lives of fixed assets
2. adj of accruals for salaries/bonuses
3. write-downs of obsolete inventory
4. material nonrecurring IRS adjustments
5. settlement of litigation
6. changes in acct priniciple inseparable from acct estimate

Question 10

reporting for change in estimate

Answer 10

prospectively: implement in current and future periods

Question 11

change in acct principle cumulative effect

Answer 11

non-comparative: difference between amt of beg retained earnings in period of change and what r/e would have been if acct change retroactively applied to all prior periods

comparative: difference between beg retained earnings in 1st period presented and what r/e would have been if new principle had been applied to all prior periods

Question 12

report changes in acct principle cumulative effect IFRS

Answer 12

3 balance sheet minimum (end of current period, end of prior period, beg of prior period)
cumulative effect shown as an adj of beg r/e on b/s for beg of prior period

Question 13

exceptions to general rule of changes in acct principle

Answer 13

1. impractical to estimate ie: fifo to lifo prospective application
2. change in depreciation: treat as change in estimate

Question 14

changes in acct entity

Answer 14

restate (retrospective application)

Question 15

examples of error correction

Answer 15

1. correction of recognition, measurement, presentation, disclosure
2. change from non-gaap to gaap

Question 16

accounting for error correction

Answer 16

comparative

1. correct info if year presented
2. adj beg r/e of earliest year presented if year not presented

non-comparative: adjust opening balance of r/e net of tax