f2b Flashcards
With respect to the footnote disclosure, what are U.S. GAAP and IFRS differences
IFRS: Since IFRS is principle-based, it requires a great deal of footnote disclosure, including a footnote for accounting policies.
Where in its financial statements should a company disclose information about its concentration of credit risks?
FASB ASC 825-10-50-20 requires note disclosures regarding a company’s concentrations of credit risks.
what is The valuation allowance
The valuation allowance represents the difference between cost and fair value. Valuation allowance is an adjunct or contra account of marketable equity securities and accounts receivable. The valuation allowance may be a debit or credit balance—since marketable equitable securities are recorded at fair value per FASB ASC 320-10, value can exceed cost.
The accounting treatment for changes in the valuation allowance depends upon the classification of the assets to which it refers:
Accounts Receivable and Securities Classified as Trading Securities—included in the determination of net income of the period in which the changes occur Securities Classified as Available-for-Sale—included as a separate component of stockholders' equity
what is the accountability mean ?
aking these characteristics of governmental entities into account, the GASB has established “accountability” as the cornerstone of financial reporting for governmental entities. Under GASB Concepts Statement 1, accountability consists of the following subobjectives:
a. Interperiod equity: Financial reporting should provide information to determine whether current-year revenues were sufficient to pay for current-year services.
b. Budgetary and fiscal compliance: Financial reporting should demonstrate whether resources were obtained and used in accordance with the entity’s legally adopted budget; it should also demonstrate compliance with other finance-related legal or contractual requirements.
c. Service efforts costs and accomplishments: Financial reporting should provide information to assist users in assessing the service efforts, costs, and accomplishments of the governmental entity.
Articulation means that financial statements are:
Articulation means that the elements of financial statements are fundamentally interrelated in two ways: (1) beginning balance + changes = ending balance, and (2) assets = liabilities + equity. The concept of double-entry accounting (i.e., debits = credits) incorporates these relationships. In this way, financial statements show different aspects of the same transaction or event affecting the entity.
Financial statements are not separate and self-balancing—the balance sheet is dependent upon the current period income or loss from the income statement to be balanced. Similarly, financial statements are affected by the other financial statements—changes in balance sheet elements (assets and liabilities) are reflected in the statement of cash flows.
he SEC’s rulemaking procedures identified on their website include which of the following steps?
The SEC website lists the following steps in the rulemaking process:
Concept Release: The rulemaking process usually begins with a rule proposal, but sometimes an issue is so unique and/or complicated that the SEC seeks out public input on which, if any, regulatory approach is appropriate. A concept release is issued describing the area of interest and the SEC's concerns, usually identifying different approaches to addressing the problem, followed by a series of questions that seek the views of the public on the issue. The public's feedback is taken into consideration as the SEC decides which approach, if any, is appropriate. Rule Proposal: The SEC publishes a detailed formal rule proposal for public comment. Unlike a concept release, a rule proposal advances specific objectives and methods for achieving them. Typically, the SEC provides between 30 and 60 days for review and comment. Just as with a concept release, the public comment is considered vital to the formulation of a final rule. Rule Adoption: Finally, the SEC Commissioners consider what they have learned from the public exposure of the proposed rule, and seek to agree on the specifics of a final rule. If a final measure is then adopted by vote of the full Commission, it becomes part of the official rules that govern the securities industry.
With respect to the objective of general purpose financial reporting, what are U.S. GAAP and IFRS differences?
The FASB and IASB have been working toward convergence of this objective. As a result, SFAC 8 replaced SFAC 1. Now U.S. GAAP and IFRS (International Financial Reporting Standards) have the same objective for financial reporting purposes.
In personal financial statements, how should estimated income taxes on the excess of the estimated current values of assets over their tax bases be reported in the statement of financial condition?
Estimated income taxes shall be presented between liabilities and net worth in the statement of financial condition.
The basic accounting principle that states that an entity is assumed to have a life that is indefinite is the principle of:
The basic accounting principle that states that an entity is assumed to have a life that is indefinite or at least sufficiently long for it to accomplish its objectives and fulfill its legal obligations is the principle of continuity or going concern.
The principles of periodicity, separate entity, and consistency support other accounting practices.
What is the purpose of SFAC 4 as stated in that concepts statement?
SFAC 4, Objectives of Financial Reporting by Nonbusiness Organizations, represents the most recent expression of the overall purposes and related objectives of financial reporting by nonbusiness organizations.
The purposes and related accounting and reporting objectives set forth in SFAC 4 are concepts—not standards—and are designed to provide a basis for establishing detailed accounting and reporting standards.
Assuming a single tax jurisdiction, under FASB ASC 740-10-45-4 the maximum number of deferred tax balances that can be presented on a classified balance sheet (statement of financial position) is:
FASB ASC 740-10-45-4 requires an enterprise to net separately all of the deferred tax assets and liabilities classified as current and noncurrent. Thus the maximum number of deferred tax balances that can be reported on an enterprise’s balance sheet is two, one current (either an asset or a liability) and one noncurrent (either an asset or a liability).
With respect to the statement of changes in equity, what are U.S. GAAP and IFRS differences?
oth GAAP and IFRS (International Financial Reporting Standards) use the term “retained earnings.” IFRS includes a “revaluation surplus” related to revaluation of property, plant, and equipment; mineral resources; and intangible assets.
IFRS uses different stock account titles than U.S. GAAP. Instead of “Common Stock,” IFRS uses an account titled “Share Capital.”
IFRS accounts for treasury stock retirements only by charging an excess in purchase price and issue cost to paid-in capital.
