F2 Flashcards
List some item NOT considered R & D costs.
- Routine Periodic Design Changes
- Marketing Research
- Quality Control Testing
- Reformulation of a chemical compound
When is translation used?
To restate F/S from functional to reporting currency.
What are the conditions for revenue recognition when the right of return exists?
- Sales price mostly fixed
- Buyer assumes all risk of loss b/c in possession
- Buyer paid consideration
- Product sold substantially complete
- Amount of future returns can be reasonably estimated
What is calculation for Gross Profit realized on Installment Sales?
Cash received x (Total GP / Sales Price)
Where are translation adjustments reported?
In OCI as unrealized G/L
Where are remeasurement G/L reported?
I/S
What is the remeasurement method and when is it used?
Is used to restate F/S from Foreign currency to Functional currency when:
- Reporting currency is functional currency
- F/S must be restated to functional currency prior to translating from the functional currency to reporting currency
How should amounts for future services to be performed under franchise agreement be accounted for by 1) the franchisor and 2) the franchisee?
Record at PV as unearned revenue/intangible asset
Identify exchange rate to be used for translation of different F/S
Assets & Liabilities: Current
CS & APIC: Historical Rate
Revenue & Expenses: AVG rate
How are G/L on nonmonetary exchanges recognized under GAAP?
Has commercial substance:
Recognized G/L on FV given up vs. CV given up
Lack Commercial Substance:
No gain unless boot received, loss in full
If boot received > 25% total consideration, all gains and losses recognized by BOTH PARTIES
Identify exchange rate to be used for remeasurement of different F/S
Balance Sheet
- Monetary – current
- Non-monetary-historical
Income Statement
- BS related – historical
- Non-BS related - AVG
When should revenue for services be recognized for US GAAP & IFRS?
US GAAP: When performed
IFRS: Use % Completion
What is the basis of a new asset in a nonmonetary exchange?
If has comm substance or boot received > 25%:
- FV asset given up + cash paid – cash received, or
- FV of Asset received if more clearly evident
If lacks comm substance:
• NBV given up + cash paid – cash received, unless adjustment for gain recognized (boot received)
How should costs of capitalized comp software developed for resale be amortized for GAAP?
Annual amort. Greater of:
- % of Revenue: Cap Amount x (Current Revenue/total projected revenue)
- SL: Cap amount x 1/life
What are the general guidelines for OCBOA F/S presentation?
- Different titles from accrual basis
- Required statements are equivalent of BS and IS
- F/S should explain changes in equity accounts
- CF not required
- Should make Disclosures similar to GAAP
R & D cost are normally expensed unless…
- Tangible asset that has alternate future use
- R & D done for others
What is the BS presentation for Construction contracts?
Completed Contracts:
- Current asset: Cost in excess of progress billings
- Current liability: Billings in excess of cost
% Complete:
- Current Asset: Cost + Est. Earnings in excess of billings
- Current Liability: Billings in excess of Cost + Est. Earnings
What are the problem solving formulas for Installment sales?
Gross Profit = Sales – COGS
GP % = GP/SP
Earned GP = Cash collections x GP%
Deferred GP = Install Receivable x GP% (Is contra asset to install receivable)
What is the solution framework JE for nonmonetary exhanges?
New Asset (FV Consideration Given)
AD of Asset given up
Cash received
Loss (if any)
Old asset
Cash Given
Gain (if any) (FV asset given – BV asset given)
What are the JE’s for construction contracts to 1. Record cost incurred? 2. Record billings? 3. Record Payment received? 4. Record Revenue/cost during construction?
Record Costs:
CIP
Cash
Record Billings:
Contract Receivable
Progress Billings
Record payment received:
Cash
Contract Receivable
Record Revenue/cost during construction:
CIP
Construction Expense
Revenue
