F1-M1 BS, IS, CI Flashcards
How do we arrive to N.I?
Net sales- selling and admin- other income(Gain on sale of securities or assets)= continuing operations. We than subtract the tax expense.
Than we take the G/L from discontinued net of tax and add it to the continuing operations minus tax expense.
What is direct method in foreign currency
Take foreign currency that is equal to 1 US dollar, I.E, 0.34 Peso = 1 US.
Where are PY service cost that not recognized hit?
It is included in accum OCI
Where are foreign currency transaction gain or losses reported?
In the income statement from continuing operations
What are the types of transactions that will impact OCI. What types WILL NOT
Pension plan and adjustments, Unrealized G/L on AFS SECURITIES AND HEDGES, Foreign TRANSLATIONS, Instrument credit risk (PUFI)
1) Change in Acc principles 2) Infrequent ) Realized AFS securities
What part of the balance sheet is accum OCI
Equity, it is similar to RE where the balance rolls over.
What is comprehensive income showing?
Change in equity that is not caused by distributions or dividends
What type of securities will hit OCI and NI. What happens when AFS securities are realized?
If it is AFS it will impact OCI. if it is trading securities it will impact the NI. When AFS securities are realized they are now part of NI instead of OCI.
What happens to foreign currency transactions when the payable has exceeded the year end?
The G/L that is realized from the transaction is taken from the year end spot rate. Not the date the company made the transaction since it was past year end. When it passed year end an entry has to be booked for unrealized G/L.
Do we realized a gain or loss when the US dollar appreciates in comparison to the foreign currency
If the US dollar goes up, we will see a gain.
How do we arrive to net income when only the balance sheet is given
Solve for RE using the balance sheet equation subtracting dividends.
Tax benefit Formula
Gain/loss (X) (1-0.30) if 30% is the tax rate
