F2 Flashcards
How to calculate impairment loss of long-term assets?
If the undiscounted future cash flows from the asset (including the sale amount) are less than the asset’s carrying amount, an impairment loss must be reported.
If the impairment loss must be reported, the amount of the impairment loss is measured by subtracting the asset’s fair value from its carrying value.
What is the direct method of expressing the exchange rate?
The direct method is the domestic price of one unit of a another currency. e.g. one euro costs $1.47.
Formulas for Installment Sales
- GP=Sales-COGS
- GP %=GP/Sale Price
- Earned Gross Profit=Cash collections * GP%
- Deferred Gross Profit= Installment Receivable * GP%
What is the journal entry to record unrealized gain/loss on trading securities?
e.g. Unrealized Loss on Trading Securities
Valuation Account (fair value adjustment)What is the journal entry to record investment “investment in investee” using Equity Method?
1) Investment in Investee
Cash
or 2) Investment in Investee
Common Stock-Parent
APIC-Parent
What is NRV?
Selling price- cost of disposal
What is market value of inventory?(GAAP)
Middle of:
Replacement cost
Market ceiling: NRV(selling price-cost of disposal)
Market floor: NRP-profit margin
Chart for calculating COGS under periodic FIFO?
Units sold Cost/unit Ending Inventory Goods Available for Sale
Chart for calculating COGS under Perpetual FIFO?
Units bought/units sold/cost per unit/change in inv./inv. Balance/COGS
How to measure impairment loss under IFRS?
- Take the greater of:
Value in use( present value of future cash flow) VS. NRV ( FV- cost to sell), which is the recoverable amount. - Recoverable- carrying value
Lessee capital lease criteria
- Ownership transfer at the end of lease term
- Written option of bargain purchase
- 90% of FV
