F2 Flashcards
Disclosures included in Summary of Significant Accounting Policies
Measurement bases
Basis of Consolidation
Depreciation methods
Amortization of Intangibles
Inventory pricing
Use of estimates
Fiscal Year definition
Revenue recognition issues
Required Risk and Uncetainty disclosures
Nature of Operations- description of entity’s core products/ services
Use of Estimates
Significant Estimates- specific to estimates that will change materially in near term
Vulnerability to any concentrations (Ex. major customers, major products, major resources)
Differences between US GAAP and IFRS in disclosures of going concern
US GAAP requires liquidation basis of accounting when bankruptcy is imminent, IFRS provides no guidance
IFRS requires disclosures only when management is aware of substantial doubt
IFRS requires assessment of at least one year from the balance sheet date
Substantial doubt about going concern definition
When relevant conditions and events considered in the aggregate indicate it is probable that an entity will not be able to meet its obligations as they become due
Going concern evaluation factors
Entity’s current financial position
Sources of liquidity
Obligations due in the upcoming year
Funds and resources necessary to maintain operations in the upcoming year
Subsequent events are recognized if _________ and disclosed if ____________
The condition existed as of the balance sheet date;
Not disclosing the event would make the F/S misleading
Disclosure for a nonrecognized subsequent event should include
Nature of the subsequent event Estimate of the financial effect, if it can be made
Fair value measurements that do not require disclosure
Share based compensation
Measurements with vendor specific evidence
Leases
Principal market
Market with greatest volume or level of activity for the asset or liability
AFS securities are measured using ________ while held to maturity securities are measured using _________
Fair value; Amortized cost
A company that has elected the fair value measurement must apply the accounting on a basis of ______
Instrument by instrument. Measured for a specific asset or a specific liability, or group of assets or group of liabilities.
Fair Value (definition)
The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement (balance sheet) date
Market approach
Uses prices and other relevant information generated by market transactions for identical or comparable assets/liabilities Level 1 or 2
Income approach
Converts future values (cash flows) into a single current value Level 2 or 3 (More likely level 3)
Cost approach
Fair value is based upon what it would cost to build an identical asset or replace the service capacity of an asset, adjusted for obsolescence Level 2 or 3
