f2 Flashcards
Which of the following items is not subject to the application of intra-period income tax allocation?
Items included in the determination of taxable income may be presented in different sections of the financial statements. Accordingly, intraperiod tax allocation is required. Income tax expense or benefit is allocated to (1) continuing operations, (2) discontinued operations, (3) other comprehensive income, and (4) items debited or credited directly to shareholders’ equity. Operating income is not one of the categories of income subject to intra-period income tax allocation.
The financial statement that provides a summary of the firm’s operations for a period of time is the
The results of operations for a period of time are reported in the income statement (statement of earnings) on the accrual basis using an approach oriented to historical transactions.
A company had $100,000 in current liabilities at the end of the current year. The company refinanced this liability on a noncurrent basis subsequent to the end of the year but before the financial statements were issued. How should this liability be presented, according to IFRS and U.S. GAAP, in the company’s year-end financial statements?
Under U.S. GAAP, a current liability is classified as noncurrent if the entity (1) intends to refinance on a noncurrent basis and (2) demonstrates an ability to complete such refinancing. The ability to refinance may be demonstrated by entering into an agreement to refinance or to reschedule payments on a long-term basis. Such an agreement may be completed after the reporting date but before the financial statements are issued. Under IFRS, a current liability may be classified as noncurrent only if the agreement to refinance or reschedule payments on a noncurrent basis is completed before the reporting date.
On December 31, Year 1, Brook Co. decided to end operations and dispose of its assets within 3 months. At December 31, Year 1, the net realizable value of the equipment was below historical cost. What is the appropriate measurement basis for equipment included in Brook’s December 31, Year 1, balance sheet?
Financial accounting principles assume that a business entity is a going concern without evidence to the contrary. This concept justifies the use of depreciation and amortization schedules and the recording of assets and liabilities using attributes other than liquidation value. However, the going concern assumption no longer applies when the entity’s existence will be terminated in 3 months, and historical cost no longer is appropriate as a measurement attribute. Accordingly, assets should be restated in accordance with the liquidation basis of accounting (at the amount of expected cash proceeds).
The statement of shareholders’ equity shows a
The statement of shareholders’ equity (changes in equity) presents a reconciliation in columnar format of the beginning and ending balances in the various shareholders’ equity accounts. A statement of changes in equity may include, for example, columns for (1) totals, (2) comprehensive income, (3) retained earnings, (4) accumulated OCI (but the components of OCI are presented in another statement), (5) common stock, and (6) additional paid-in capital.
Intraperiod tax allocation must be reported on the face of the balance sheet.true or false
false Intraperiod tax allocation is required in the income statement. Thus, income tax expense or benefit is allocated to (1) continuing operations, (2) discontinued operations, (3) other comprehensive income, and (4) items debited or credited directly to shareholders’ equity.
The single-step income statement matches operating revenues and expenses in a section separate from nonoperating items.true or false
false The single-step income statement provides one grouping for revenues and gains and one for expenses and losses. The single step is the one subtraction necessary to arrive at net income. The multiple-step income statement matches operating revenues and expenses in a section separate from nonoperating items. It enhances disclosure by presenting subtotals.
An entity must report in the financial statements comprehensive income attributable to a noncontrolling interest.true or false
true If a noncontrolling interest exists, amounts for net income and comprehensive income attributable to the parent and to the subsidiary must be reported in the appropriate statements.
what is the classification of Cash surrender value of life insurance policies
nvestments and funds. These noncurrent assets include nonoperating items intended to be held beyond the longer of 1 year or the operating cycle, e.g., cash surrender value.
