F3

Question 1

What is a Trading Security?

Answer 1

A Current Asset. Debt & Equity held for sale

Question 2

What is an Available for Sale (AFS) Security?

Answer 2

GR: Non-Current Asset. Debt & Equity that is not Trading or HTM

Question 3

What is a Held to Maturity (HTM) Security/

Answer 3

GR: Non-Current Asset. Debt ONLY with intent and ability to hold to maturity

Question 4

What are the 3 classifications of securities under IFRS?

Answer 4

Financial Assets at FV through P/L, AFS, HTM

Question 5

Under IFRS, what are Financial Assets at FV through P/L Securities?

Answer 5

Held for Trading (like GAAP) or Assets designated as investment at FV through P/L using FV option

Question 6

How are Trading Securities valued?

Answer 6

at FV. Record Unreal G/L in IDEA

Question 7

How are AFS Securities valued?

Answer 7

at FV. Record Unreal G/L in OCI: PUFE

Question 8

How are AFS Securities valued in IFRS?

Answer 8

AFS to OCI except foreign exchange G/L for debt securities to IDEA

Question 9

How are HTM Securities valued?

Answer 9

at amortized cost

Question 10

What is the difference between GAAP (P/L) and Tax Return (nontaxable until sold)?

Answer 10

deferred taxes

Question 11

When reclassifying Securities FROM TRADING, how do you adjust unreal G/L?

Answer 11

no adjustment

Question 12

When reclassifying Securities TO TRADING, how do you adjust unreal G/L?

Answer 12

Recognize unreal G/L in earnings

Question 13

When reclassifying Securities FROM HTM TO AFS, how do you adjust unreal G/L?

Answer 13

record in OCI

Question 14

When reclassifying Securities FROM AFS TO HTM, how do you adjust unreal G/L?

Answer 14

Amort G/L from OCI to I/S

Question 15

With an impairment loss, if the FV decrease is permanent, where do you record the write down?

Answer 15

I/S

Question 16

Under IFRS, what is the difference with Securities impairment losses?

Answer 16

may be reversed

Question 17

Where is the sale of a security reported?

Answer 17

on I/S

Question 18

What are the income tax effects of sale of a security?

Answer 18

mark to market

Question 19

What are consolidated financial statements?

Answer 19

an economic truth, but a legal fiction

Question 20

What are the criteria for when to/not to consolidate?

Answer 20

consolidate ALL majority owned subs to have one management and one economic entity. DO NOT consolidate when control is not with owners. Can consolidate companies with different year ends

Question 21

Compare GAAP vs. IFRS for consolidating companies with different year ends.

Answer 21

GAAP (DISCLOSE significant txns during gap period) IFRS(adj sub F/S for significant txns during gap period)

Question 22

What are the different degrees of control and what methods are used in external reporting for consolidations?

Answer 22

COST (50%, control)

Question 23

What are the key points about the cost method?

Answer 23

investment is not adjusted for earnings, is adjusted to FV, dividends < RE are income

Question 24

What constitutes significant influence?

Answer 24

majority of board, or largest S/H

Question 25

What are the key points about the equity method?

Answer 25

like a bank account. BASE. Cost + earnings – dividends = end

Question 26

What are stock dividends?

Answer 26

memo entries only

Question 27

In the equity method, how is goodwill calculated?

Answer 27

Purchase Price – NBV – FV (amort, service charge) = excess (Goodwill)

Question 28

What method do joint ventures use?

Answer 28

equity method for GAAP & IFRS

Question 29

How do you record Cost to Equity method change?

Answer 29

recalculate last year % by using “what-if” equity method (GAAP only)

Question 30

What are the exceptions under GAAP for required consolidation for \>50% ownership?

Answer 30

not required with reorganization or bankruptcy

Question 31

What are the exceptions under IFRS for required consolidation for \>50% ownership?

Answer 31

not required if parent is a sub, parent is not public, AND the parent's parent produced consolidated IFRS statements

Question 32

What are the fundamental principles of the acquisition method?

Answer 32

recognition principle (recognize everything) measurement principle (at 100% FV)

Question 33

What is the journal entry accounts for the acquisition method?

Answer 33

CAR IN BIG!

Question 34

What is CAR?

Answer 34

C/S, APIC, R/E. (sub's old books eliminated, NBV)

Question 35

What is IN?

Answer 35

Inv in Sub & NCI

Question 36

What is BIG?

Answer 36

BS to FV, Identifiable Intangible A @ FV, and Goodwill (gain) plugged

Question 37

How is the acquisition journal entry recorded?

Answer 37

CAR (DR) + BIG (DR) = IN (CR)

Question 38

If control % changes, how is non control to control reported?

Answer 38

previous C/S to FV & recog in I/S

Question 39

If control % changes, how is change in control reported?

Answer 39

equity txn, record in APIC (like treasury stock)

Question 40

If control % changes, how is control to non control reported?

Answer 40

Sale G/L and adj remaining C/S to FV (record both on I/S)

Question 41

Which intercompany transactions are eliminated for external reporting

Answer 41

ALL