F2

Question 1

On personal financial statements, how are all items are reported?

Answer 1

At their fair market value

Question 2

Personal financial statements usually include which statements?

Answer 2

Statement of Financial Condition (B/S) and Statement of Changes in Net Worth (I/S)

Question 3

When does the completed contract method recognize revenue and expense?

Answer 3

recognized when contract is complete, recognized immediately in their entirety

Question 4

How is total gross profit/loss recognized?

Answer 4

(contract price - total costs to complete project) * % complete

Question 5

Under the percentage of completion method, how is annual gross profit calculated?

Answer 5

(total costs incurred to date/total expected costs * total expected gross profit) _ total gross profit previously recognized

Question 6

What happens to monetary assets during periods of inflation where the amount in the asset account remains constant?

Answer 6

we lose purchasing power loss

Question 7

Purchasing power gains and losses are associated with what type of assets and liabilities?

Answer 7

Monetary

Question 8

Where are translation adjustments and foreign currency remeasurement gains/losses included?

Answer 8

Foreign Currency Translation Adjustments (PUFER) included in OCI, gains/losses from remeasuring the foreign subsidiary_s financial statements from local currency to functional currency included in income from continuing operations

Question 9

What is a foreign subsidiary_s functional currency?

Answer 9

the currency of the environment in which the subsidiary primarily generates and expends cash

Question 10

When the re-measurement method is used, we take historical rates only for what accounts?

Answer 10

balance sheet accounts carried at cost

Question 11

What is the current rate?

Answer 11

rate used to translate all assets and liabilities from the functional to reporting currency

Question 12

If a non-monetary exchange has commercial substance, how is the transaction accounted for?

Answer 12

the transaction is accounted for using the fair value of the asset surrendered or received, which ever is more evident

Question 13

When cash is received in a nonmonetary transaction < 10% of the total consideration, how do we treat this transaction?

Answer 13

a proportional amount of the gain is recognized

Question 14

When a non-monetary transaction has commercial substance, how are gains and losses recognized?

Answer 14

fair value - book value (of the asset given up)

Question 15

What is a restriction of asset value?

Answer 15

Assets should not be valued at more than fair value, so if BV>FV, the asset should be recorded at the lower FV

Question 16

Under IFRS, how are changes of dissimilar assets treated?

Answer 16

regarded as exchanges that generate revenue, all gains and losses are recognized

Question 17

When are gains and losses recognized in exchanges containing commercial substance?

Answer 17

gains and losses recognized immediately

Question 18

When a transaction involving non-monetary exchange lacks commercial substance, what amount is used to record the newly acquired assets?

Answer 18

the reported amount of the non-monetary assets surrendered

Question 19

Exceptions to valuing the transaction at fair value include:

Answer 19

if the exchange was made solely to facilitate the sale to a third-party that is not a party to the exchange lack of commercial substance

Question 20

What 2 requirements are there in order to have commercial substance?

Answer 20

Risk, timing, and amount of the expected future cash flows from the asset transfer different significantly from the risk, timing, and amount of the expected future cash flow_s from the asset received OR the entity specific value of the asset differs significantly from the asset transferred

Question 21

If a nonmonetary exchange lacks commercial substance and a boot is paid, how is this accounted for?

Answer 21

no gain is recognized

Question 22

When can revenue be recognized under the installment method?

Answer 22

Revenue cannot be recognized prior to the completion of the long-term project

Question 23

Under the installment method, what do we do with total gross profit and how is realized gross profit calculated?

Answer 23

total gross profit is deferred until cash payments are received realized gross profit = gross profit % on the sale * (cash collected + installment amount)

Question 24

Under the cost recovery method, when is revenue recognized?

Answer 24

revenue is recognized after cash equaling the cost of the item has been collected

Question 25

Under the installment method, how is deferred gross profit calculated?

Answer 25

installment receivable * gross profit %

Question 26

When do we use installment sales?

Answer 26

When impossible to establish a reasonable bad debt percentage and probable some amount will be collected, but this amount cannot be projected

Question 27

What is required for revenue recognition under GAAP?

Answer 27

a signed contract, transfer of risks and rewards, price is fixed and determinable, and collection is reasonably assured

Question 28

How is amortization of capitalized software costs calculated?

Answer 28

GREATER of: straight-line amortization OR (sales revenue from software / total projected sale)

Question 29

Before technological feasibility is established, how are computer software development costs treated?

Answer 29

Expensed as R&D

Question 30

How should royalties paid be accounted for?

Answer 30

expense in period incurred

Question 31

When does an impairment loss exist?

Answer 31

When carrying value > recoverable amount

Question 32

When is goodwill capitalized?

Answer 32

only when incurred in the purchase of another entity

Question 33

How do we treat costs incurred for maintaining or developing goodwill?

Answer 33

Expense

Question 34

__________ all costs first successfully defended patents, _____________ all costs for unsuccessfully defended patents

Answer 34

Capitalize, Expense

Question 35

When there is unlimited right of return, nothing should be recorded as revenue unless all of the following are met:

Answer 35

the sales price is fixed the buyer assumes all risk of loss the buyer has paid some form of consideration the amount of returns can be reasonably estimated

Question 36

When are revenues recognized?

Answer 36

In the period they are realized or realizable

Question 37

Is goodwill amortized?

Answer 37

No, Goodwill is not amortized, but periodically monitored for impairment

Question 38

When are start-up costs required to be expensed?

Answer 38

when incurred

Question 39

US GAAP requires goodwill to be tested for impairment at what level?

Answer 39

reporting unit level

Question 40

How does US GAAP handle subsequent reversal of intangible asset impairment losses unless the intangible asset is held for sale

Answer 40

US GAAP prohibits

Question 41

Decrease in A/R will be larger under which basis of accounting?

Answer 41

Cash (cash is being paid to us)

Question 42

Increase in A/P represents expenses incurred but not yet paid, resulting in a higher income for which basis of accounting?

Answer 42

Cash (we have not yet paid, so we have more cash)

Question 43

Test for recoverability

Answer 43

if undiscounted cash flow_s > carrying amount, no impairment if undiscounted cash flows < carrying amount, impairment = the carrying amount - fair value

Question 44

Under IFRS, how is goodwill impairment is analyzed?

Answer 44

at the cash generating level

Question 45

IFRS goodwill impairment process (one-step process)

Answer 45

Carrying value of the cash generating unit - the GREATER of (cash generating unit's FV - cost to sell) or value in use (present value of future cash flows)

Question 46

How is GAAP impairment loss calculated?

Answer 46

goodwill implied fair value - goodwill book value

Question 47

When converting from cash basis to accrual basis, what are the primary rules to consider?

Answer 47

add increase in current assets subtract decreases in current assets add decreases in current liabilities subtract increases in current liabilities

Question 48

Initial payment that can be applied against future payments should be recognized as a _____________ (as a liability)

Answer 48

deferred revenue

Question 49

Research costs associated with on internally developed asset are always _________

Answer 49

Expensed

Question 50

IFRS development costs may be capitalized if the following criteria are met:

Answer 50

Technical feasibility established, Company intends to complete the asset, company has ability to sell or use asset, sufficient resources available to complete, and asset will generate future economic benefits

Question 51

When is goodwill recognized in the balance sheet?

Answer 51

recognized in the balance sheet when created from a business acquisition

Question 52

When does the franchisor report revenue from initial franchise fees?

Answer 52

When all material conditions of the sale have been substantially performed

Question 53

How to we treat finite life intangibles?

Answer 53

Amortize over the period benefited

Question 54

What is the time period over which Intangibles are amortized?

Answer 54

the lesser of their legal or economic life

Question 55

What is the IFRS recoverable amount equal to?

Answer 55

the GREATER of (fair value - costs to sell) or value in use (present value of future cash flows)

Question 56

What is true about all non-monetary transactions?

Answer 56

Fair value given equals the fair value received and we recognize losses in full

Question 57

What a fixed asset is sold, gain or loss is recognized as ______________________ and the amount of the gain or loss equals ___________________.

Answer 57

Income from continuing operations, the proceeds from the sale minus the caring amount of the fixed asset

Question 58

When is gain on non-monetary transactions recorded?

Answer 58

if we receive cash or boot

Question 59

When do transactions lack commercial substance?

Answer 59

if the assets exchanged have a similar productive use and the amount of cash exchanged is insignificant

Question 60

How are direct costs of doing contracted R&D work treated?

Answer 60

Capitalized

Question 61

How is R&D equipment treated based on whether is has alternative future use or can only be used on the current project?

Answer 61

Capitalize with alternative future use and expense immediately if the equipment can only be used on the current project

Question 62

How are patent costs treated?

Answer 62

Always capitalized

Question 63

R&D costs are expensed as incurred under US GAAP except for:

Answer 63

cost to be reimbursed by another company costs for a long lived tangible asset with alternative future use

Question 64

A cash deposit received from a customer for future services is a _______ until the sale takes place

Answer 64

Liability

Question 65

Where should the amount of deferred gross profit relating to installment A/R collections 12 months beyond the balance sheet date be reported?

Answer 65

Current assets as a contra account

Question 66

How is installment sales gross profit calculated?

Answer 66

Total installment sales * (proportion of collections on installment sales / cost of installment sales)

Question 67

We __________ costs between the idea phase and technological feasibility phase, __________ costs between the technological feasibility and release for sale phases, and once the product is released for sale, we _________ costs

Answer 67

Expense, Capitalize, Amortize

Question 68

If the entity_s books are not maintained in it_s functional currency, what is required and where do gains or losses go?

Answer 68

Re-measurement into functional currency is required and any gain or loss is part of continuing operations

Question 69

Where are translation gains/losses recorded?

Answer 69

OCI under Shareholder's Equity

Question 70

Where should a company that wishes to disclose information about the effect of changing prices should report this information?

Answer 70

Supplementary information to the financial statements

Question 71

Holding net monetary assets during inflation will result in a ______ of purchasing power while holding net monetary liabilities will result in a ______.

Answer 71

Loss, Gain

Question 72

R&D work a company does for a client is an __________ but R&D done work for the company by another company is an ___________.

Answer 72

Operating Expense, R&D Expense

Question 73

If computer software is to be used internally, how do we treat development costs?

Answer 73

Amortized on straight-line basis using GAAP