F2M4

Question 1

Should this item be included in the Summary of Significant Accounting Policies? “Criteria for determining which investments are treated as cash equivalents”

Answer 1

Yes, determining which assets are considered to be cash equivalents is a significant policy.

Question 2

Should this be disclosed in a Summary of Significant Accounting Policies? “basis of profit recognition on long term contracts”

Answer 2

“basis” indicates policy, not specific amounts of details. so, Yes.

Question 3

Are the format and location of the Summary of Accounting Policies, fixed by GAAP?

Answer 3

No, format and location are not fixed. They are generally the first or second note but that is a reasonable and very general practice, not a rule.

Question 4

Will the company duplicate information provided in the Summary of Accounting Policies note in later notes?

Answer 4

No, additional notes about policies are to present things in greater detail, not duplicated.

Question 5

qualitative assessments are typically discussed/ included where?

Answer 5

In the Management Discussion and Analysis (MD&A) that proceeds FS and footnotes.

Question 6

if two different customer make up a significant portion of sales, what should the entity disclose about the two customers?

Answer 6

The amount of the entity’s revenue from each of the two customers.

Question 7

Disclosure of vulnerability to concentration is required if all of the following criteria are met:

Answer 7

The concentration exists as of the financial statement date.

The concentration makes the entity vulnerable to the risk of a near-term severe impact. (company would be at financial risk)

It is at least reasonably possible that the events that could cause a severe impact from the vulnerability will occur in the near term.

Question 8

Definition of a Current Vulnerability Due to certain concentrations

Answer 8

arises when an entity is exposed to risk of loss that could be mitigated through diversification.