F2 Flashcards
What is the size test for segment reporting?
10% of one of the following:
1. Revenue - The segment’s revenue (intercompany and external) is greater than 10% of the company’s
2. combined profits or combined losses - look at the total profit (income) without subtracting losses OR look at the total losses separately from profit. Do not consider the combined amount as a total for finding the threshold.
3. Assets
What is the reporting sufficiency test?
75%. If the total revenue of segments is less than 75%, then additional segments should be identified.
What are the reporting thresholds that determine when a company has to file? (large accelerated filer, accelerated filer, smaller reporting company)
- large accelerated filer - worldwide mkt value of equity held by nonaffiliates of $700M or more
- accelerated filer - between $75M and $700M
- Smaller company - under $75m (or under revenue of $100m)
How many days does a company have to report a 10K?
- large accelerated filer - 60 days
- accelerated filer - 75 days
- Smaller company - 90 days
How many days does a company have to report a 10Q?
- large accelerated filer - 40 days
- accelerated filer
- Smaller company
How does accrued expenses impact net income in cash basis vs accrual?
a decrease in accrued expense means cash paid to expenses is greater than the accrual basis. This makes a greater expense for cash basis and a lower net income
How does A/R impact net income in cash basis vs accrual?
a decrease in A/R for cash basis means that cash collected exceeds revenue recognized on accrual. This makes a higher cash basis income than accrual basis for decreases in A/R
How to find COGS?
COGS = Beg Inventory + Purchases - Ending Inventory
How to find APIC at the formation of a partnership
APIC = FV of assets - FV of liabilities - common stock
DR Assets @ FV
CR liabilities @ FV
CR common stock (shares issued * par value)
CR APIC
How are assets and liabilities valued at the formation of a partnership/addition of a partner
Assets = FV (less mortgage/loan)
liabilities = PV
What is the exact method for the addition of a partner/formation? Determine the exact buy in amount for a new partner.
- Purchase price = BV of capital accounts
- use finger method for buy in $
a. 25% interest for new partner = 1/4 interest
b. 4-1 = 3
c. current capital acct total of existing partners / 3 = new buy in $ for new partner
There are no excess amounts/allocations/AJEs for any partner. Each partner has the exact interest of their buy in amounts.
What is the bonus method for the addition of a new partner/formation? Calculate the bonus amounts & allocations.
- the buy in amount does not necessarily equal the % interest of each partner according to their contracts. Any excess paid over the % interest is allocated to the other partners as a bonus.
- a. find the new total of the capital accounts with the buy in amount by adding the buy in amount to the existing capital accounts.
b. new total capital * % interest of new partner = new partner’s capital account
c. new partner’s capital acct (b) - new partner’s buy in = bonus. if new partner’s acct> buy in, bonus goes to existing partners. if new partner’s acct < buy in, bonus goes to new partner.
d. existing partners split bonus based on the old p&l ratio.
what is the goodwill method for the addition of a new partner/formation? calculate goodwill.
- excess contributed capital of new partner is recorded a s goodwill & given to existing partners. There are no losses
- a. Find the implied value. This is the new total capital balance. Implied value = buy in $ / % interest of new partner.
b. book value = capital accts of existing partners + buy in $ of new partner
c. implied value - book value = goodwill
DR goodwill
CR existing partner’s capital account
In a partnership, what is the order of payments made to partners’ capital accounts from profit and losses?
- Bonus - according to contract
- Interest - according to contract
- Salary - according to contract
- remaining profit/loss - reduced by items already paid. negative balances are recorded as a loss.
*if there are not enough profits to cover a bonus, interest, and salary, then a loss will be recorded.
* The first 3 items will be paid according the contract. Profits will be reduced by these amounts.