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FAR MC > F3 > Flashcards

F3 Flashcards

1
Q

Cash Reconciliation - Bank adjustments

A
  1. In transit deposits (not yet in bank) - add
  2. Outstanding / unrecognized cut checks - deduct
  3. Bank Errors - fix
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2
Q

Cash reconciliation - book adjustments

A
  1. EFT (electronic funds transfer unrecorded) (add)
  2. Bank Service charges (deduct)
  3. Accountant Error (fix)
  4. NSF check (bounced) - deduct
  5. Earned interest - add
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3
Q

Money market account

A

Cash

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4
Q

AP checks recorded on 12/31 but not mailed until Jan 15 - reconciled in reporting period or next year?

A

Next year

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5
Q

Checkbook vs Bank Bal - given no other info, which should you assume is correct on 12/31?

A

Book balance, once finally adjusted, will not equal bank balance. Assume book bal is correct because bank balance will lack checks in transit

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6
Q

Is a 90 day certificate of deposit a cash equivalent?

A

Yes

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7
Q

Is a post dated check from customer a cash equivalent?

A

If dated AFTER the balance sheet date, no - otherwise yes

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8
Q

What must you be careful of with bank rec questions?

A

Are you reconciling the bank bal. vs the book bal. - different items for each category

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9
Q

AR vs Note Receivable

A

AR is an ORAL promise, note is a WRITTEN promise

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10
Q

Sales discounts gross Method expectation of customer payment

A

Expect customer to NOT take discount

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11
Q

Sales discounts NET Method expectation of customer

A

You expect customer to TAKE the discount

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12
Q

Sales discounts gross method vs net method special accounts

A

Gross: Sales discounts taken
Net: Sales discounts NOT taken

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13
Q

Is a sales / cash discount a speed or qty discount?

A

Speed

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14
Q

What type of discount is a trade discount?

A

Qty / volume / economies of scale discount

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15
Q

What methods can be applied to trade discounts?

A

Net only

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16
Q

What is the general rule for expected sales returns?

A

Do not journalize UNLESS % of returns is MATERIAL and can be REASONABLY ESTIMATED

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17
Q

How to journalize sales returns and allowances?

A

Sales returns and allowances

AR

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18
Q

What kind of account is sales returns and allowances?

A

Contra Revenue

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19
Q

What is the direct write off method for uncollectible AR and what is it used for?

A

No Allowance for Doubtful Accts, only write off to bad debt expense when uncollectible. NOT GAAP. Used for tax purposes.

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20
Q

What is the allowance method and what is it used for?

A

Used for GAAP. Record bad debt expense and CR allowance for Doubtful, write off to allowance for Doubtful

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21
Q

Difference between income statement Approach and b/s approach in calculating allowance for Doubtful ending balance?

A

I/S - calculate the delta first

B/S - calculate the ending bal. first

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22
Q

Certificate of deposit

A

A bank account where you agree to leave your money in and can’t withdraw until x date. Why done? Better interest rate

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23
Q

How is cash paid for a cash equivalent recorded on statement of cash flows?

A

It isn’t. It’s exchanging cash for cash basically. Net zero change

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24
Q

What is the effect on writing off AR in GAAP on b/s and I/s?

A

No change. Offsets

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25
Q

Pledging - what is and how to report?

A

AR as collateral, report via note disclosure only

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26
Q

Factoring AR

A

Selling AR

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27
Q

Factoring with recourse

A

If Customer doesn’t pay, it comes back on you. Can either by treated as a sale or as pledging

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28
Q

When is factoring with recourse a sale?

A
  1. Due from factor can be reasonably estimated
  2. Transferor surrenders control (factor can sell)
  3. Transferor is not required to buyback uncollected Receivables, but may be required to replace with similar AR
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29
Q

What two ways can factoring with recourse be reported?

A

As a sale (if it meets all 3 requirements) or as a pledge (notes only)

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30
Q

How is factoring without recourse journalized?

A

Cash
Due from factor
Loss on sale of AR
AR

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31
Q

Securitization of AR

A

AR sold to a trust hat sells securities that are collaterized by AR. As AR is paid, investors receive cash back

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32
Q

What is present value?

A

Face amount
Less unearned interest
= PV

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33
Q

Discounting notes Receivable

A

Sell notes Receivable with or without recourse

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34
Q

How are notes Receivable discounted journalized?

A

Cash
Notes Receivable Discounted

-or-

Cash
Notes Receivable*
*note disclosure of contingent liability

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35
Q

What kind of asset is notes Receivable discounted?

A

Contra-asset / contra-AR

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36
Q

A method estimating uncollectible accounts that emphasizes asset valuations rather than income
measurement

A

Aging of Receivables

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37
Q

How to solve for cash received on note discount

A

Note maturity value * months remaining on term of note / 12 * bank effective interest rate = cash received from bank

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38
Q

What is the note discount when notes are sold?

A

The interest the bank gets on the note (the interest the seller doesn’t get to keep)

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39
Q

Solving for the maturity value of a note at x% interest with n equal payments

A

Must calculate with ordinary annuity. Face / ordinary annuity at x% = equal pmts * n periods = maturity amount

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40
Q

Sales returns and allowances is what kind of account?

A

Contra-sales (IS)

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41
Q

Sales returns and allowances JE

A

Sales returns and allowances

AR

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42
Q

Non-conforming goods

A

Wrong stuff - Doesn’t belong to buyer

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43
Q

If likelihood that goods will be returned cannot be estimated, how accounted for?

A

Kept in seller’s inventory until right to return elapsed. Sale NOT finalized

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44
Q

Revenue Recognition rule for right to return - when can revenue be recognized?

A
  1. Sales price is substantially fixed
  2. Buyer assumes risk of loss
  3. Buyer has paid
  4. Product sold is substantially complete
  5. Future returns estimatable
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45
Q

Public Warehouses - how to tell ownership?

A

Owner has warehouse receipt

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46
Q

Sales with mandatory buyback (financing) - who has possession of inventory?

A

Seller even though title has passed

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47
Q

Installment sale where seller retains legal title as security for the loan - who has the good?

A

If % of uncollectible debts cannot be estimated keep in sellers inventory

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48
Q

When replacement cost has gone down for a good - what is the exception to revaluing inventory?

A

If cost is recoverable and an approx. normal profit can be recognized during the ordinary course of biz, then value at cost

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49
Q

Precious metals and farm products are valued at

A

Net realizable value

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50
Q

When is inventory revalued?

A

A loss on sale is expected

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51
Q

How to recognize a loss on revaluation of inventory

A

GAAP: If material, unusual item, else expense to COGS.

IFRS: doesn’t specify

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52
Q

Can revaluation loss (write downs) be reversed under GAAP?

A

Generally no

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53
Q

Can revaluation loss (write downs) be reversed under IFRS?

A

Generally yes, limited to amount of previous write down

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54
Q

Net realizable value

A

What you can sell it for less costs to complete / sell

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55
Q

Periodic account only

A

Purchases (instead of inventory)

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56
Q

IFRS inventory valuation method

A

All are Lower of Cost or NRV

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57
Q

Does inventory valuation method have to match actual inventory flows?

A

GAAP - no

IFRS - yes

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58
Q

Is LIFO allowed under IFRS?

A

No

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59
Q

Periodic = perpetual under which method?

A

FIFO

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60
Q

During periods of rising prices which inventory method values inventory the lowest?

A

LIFO

L = lowest

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61
Q

If inventory is valued lower then COGS is valued

A

Higher

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62
Q

If inventory is valued higher then

A

COGS is valued lower

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63
Q

Firm purchase commitment

A

Agreement to purchase a specified amt of goods at some future date

Must be disclosed

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64
Q

When to recognize a loss on firm purchase commitment?

A

When price declines (upon discovery)

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65
Q

Are temporary declines in inventory value expected to reverse by end of annual period recognized as a loss?

A

No, not in interim statements

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66
Q

What goods can be valued at above cost in inventory?

A

Precious metals and agricultural goods

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67
Q

Is shipping and handling incurred in connection with goods shipped FOB destination?

A

No - sale is assumed to occur on customer’s shipping dock. Seller records these are fright out selling charges

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68
Q

Is shipping and handling incurred in connection with goods shipped FOB shipping point?

A

Yes - buyer is responsible for getting the goods to the necessarily location in the necessary condition to sell. These extra costs are rolled into cost of inventory (FREIGHT IN)

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69
Q

If beg. Bal inventory is understated then COGS is

A

Understated because the prior period COGS was overstated - this will correct as an understatement in the current period

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70
Q

Which inventory method most closely approximates current cost for COGS?

A

LIFO b/c the last in item (current cost) gets charged to COGS

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71
Q

Which inventory method most closely approximates current cost for inventory?

A

FIFO b/c the what’s left in inventory is in their for the “first time”

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72
Q

LIFO memory tool

A

Long life

Inventory has a “long life” with LIFO because old stock keeps getting shoved to the back by new

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73
Q

FIFO memory tool

A

First time in inventory

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74
Q

When inventory is destroyed what method can be used to determine cost of destroyed inventory?

A

Gross profit Method

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75
Q

A dollar value LIFO “LAYER” represents what?

A

A layer of inventory from that year, I.e. The remaining delta of that year. Be careful reading. Are you dealing with a layer or aggregate balance (end bal for that year)

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76
Q

Under a moving average inventory, what cost is used for COGS?

A

The moving average cost

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77
Q

When is the moving average cost of inventory calculated?

A

After each purchase

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78
Q

Disadvantage of periodic inventory system is

A

Includes cost of inventory sold and shortages b/c COGS is a plug

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79
Q

What is the JE for loss on purchase commitments?

A

Estimated Loss on purchase commitment

Estimated Liability on purchase commitment

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80
Q

Which inventory costing method maximizes profits in periods of rising prices?

A

FIFO

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81
Q

If total inventory is used to apply lower of cost or NRV, how determined?

A

Pick lower of Total inventory cost or total inventory at NRV

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82
Q

Why do perpetual and periodic NOT equal under LIFO?

A

Because under periodic LIFO assumes the oldest inventory is still there, but if there was a big sale in the middle of the month and then a big purchase periodic would be majorly off due to its assumptions

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83
Q

Are HC and Replacement Cost the same thing?

A

No!

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84
Q

What is the JE for donated fixed assets?

A 
Fixed Asset (FV)
        Gain on nonreciprocal transfer
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85
Q

Revaluation loss that reverses a gain

A

Offset the OCI revaluation surplus instead of recording on IS

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86
Q

Can the revaluation method be used on one asset but not another?

A

They must be applied to item classes (all items within that class) instead of individual items. Example: furniture and fixtures

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87
Q

With revalued items under IFRS what also must be disclosed?

A

Historical cost equivalent

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88
Q

Can a revaluation gain be reported on the IS?

A

Yes, but only to the extent of reversing a previously recognized loss

89
Q

What happens if a revalued asset becomes impaired?

A

Reverse the revaluation surplus to zero and the excess is reported on the IS

90
Q

What are considered land costs?

A

Any costs to bring the land to the condition necessary for use (up to excavation of building)

91
Q

How are interest costs for and during the construction period for land improvements be recognized?

A

Capitalized via the weighted average of accumulated expenditures

92
Q

Land vs Land Improvements depreciation

A

Land is NOT depreciated but land improvements are (paving / water systems / lighting / landscaping / etc.)

93
Q

Digging a hole for a foundation is a ____ cost?

A

Building

94
Q

Filling in a hole is a ____ cost?

A

Land

95
Q

Basket purchase of land and buildings

A

Allocate purchase price based on ratio of appraised values

96
Q

How is a replacement of a fixed asset recognized where the asset’s carrying value is known?

A

Remove old asset and recognize any gain or loss. Capitalize new asset to asset account

97
Q

How is a replacement of a fixed asset recognized where the asset’s carrying value is unknown and assets life is extended?

A

Debit Accumulated Depr for the cost of improvement / replacement

98
Q

If usefulness of asset is increased by an improvement, how recorded?

A

Capitalize to the asset account

99
Q

How are repairs capitalized?

A

They AREN’T - they are expenses to repair and maintenance UNLESS extraordinary, in which case they are treated as an improvement

100
Q

How to recognize additions to fixed asset?

A

Capitalize

101
Q

If assets life is extended vs assets usefulness is increased - how is Recognition different?

A

Extension of life = reduce AD

Usefulness increased = capitalize

102
Q

When does capitalizing interest end?

A

Asset is substantially complete and ready for intended use

103
Q

If there is an intentional delay in construction - should interest still get capitalized?

A

No

104
Q

If a building suffers uninsured damage that is repaired - how recorded?

A

Like a replacement. Take a loss on the damage and capitalize the repair costs

105
Q

For machinery held for sale - should interest costs be capitalized?

A

Interest for machinery held for sale CANNOT be capitalized. Must be for entity’s use as a fixed asset

106
Q

What is the depreciation basis for leasehold improvements on a lease?

A

The lessor of the estimated useful life or the remaining term of the lease

107
Q

If a note is issued to finance a fixed asset - what is the capitalized cost of the fixed asset?

A

Present value of the note - why? Removes interest so that it’s not capitalized

108
Q

Can a revaluation reversal occur in separate years?

A

Yes, a loss on the X1 income statement can be reversed on the X2 income statement. Any excess is OCI as revaluation surplus

109
Q

What’s an alternative to the weighted average of accumulated expenditures to find out the capitalizable interest expense?

A

JTD Construction in progress balance that month * the interest rate * 1/12 = the max interest that can be capitalized JTD for that month. Add all the months together to find the total

110
Q

Proceeds from the sale of a building on land purchased should be

A

Deducted from the cost of the land

111
Q

Should building modification costs be capitalized?

A

Yes - additions are capitalized

112
Q

Should the depreciation method reflect the expected pattern of fixed asset consumption?

A

GAAP - not required

IFRS - yes

113
Q

Should the depreciation method reflect the expected pattern of fixed asset consumption?

A

GAAP - not required

IFRS - yes

114
Q

Component Depreciation - who requires?

A

IFRS not GAAP

115
Q

What is composite depreciation?

A

Depreciating an entire class of assets over a single life

116
Q

Composite depreciation asset Retirement entry

A

If the average service life for the group has not been reached when an asset in the group is retired, instead of a gain of loss, offset the AD account for that amount

117
Q

Sum of year’s digits depreciation method

A 
Numerator = remaining life
Denominator = sum of years digits
118
Q

Which depreciation method does NOT factor salvage value?

A

Double declining balance. Instead don’t depreciate past salvage value

119
Q

Which depreciation method does NOT factor salvage value?

A

Double declining balance. Instead don’t depreciate past salvage value

120
Q

Depreciation necessary Disclosures

A
  1. depreciation expense
  2. Balance of major classes of depreciable assets by nature and function
  3. Accumulated depreciation allowances by classes or in total
  4. Methods used by class for depreciation
121
Q

Land capitalized cost

A

Residual value
Extraction / development cost
Anticipated restoration cost
Land purchase price

122
Q

Commercial Substance

A

Future cash flows are impacted as a result of transaction

123
Q

Nonmonetary transactions w/ commercial substance

gain / loss measurement basis

A

Fair value of assets GIVEN UP vs book value - exclude cash exchanged

124
Q

Boot

A

Cash or other assets added to an exchange to make exchange more fair

125
Q

IFRS non-monetary exchange rules vs GAAP

A

Dissimilar Assets? Recognize gain like GAAP commercial substance

Similar assets? No gain

126
Q

When to use rules of exchange lacking commercial substance?

A

a. Exchange lacks commercial substance
b. Fair values NOT determinable
c. Exchange is to facilitate sales

127
Q

Lacking commercial substance exchanges, no boot

A

No gain

128
Q

Lack commercial substance

Boot <25% PAID

A

No gain

129
Q

Lacking commercial substance,

Boot <25% RECEIVED

A

Gain is proportional

130
Q

Lacking commercial substance, boot >25%

A

Monetary exchange

131
Q

Lacking commercial substance

Loss

A

Recognize loss

132
Q

Involuntary Conversion

A

Gain / loss recognized and deferred tax asset / Liability created

133
Q

What non-monetary exchange measures the exchange based on the reported amount of the nonmonetary asset surrendered (not its fair value)

A

Lacking commercial substance

134
Q

When boot is <25%, when is a gain recognized?

A

When RECEIVED

Recognize and Receive both start with “R”s

135
Q

Sale of asset - where to put in statement of cash flows?

A

Cash received for sale for non-operating asset -> investing activity

136
Q

Should composition of fixed assets be reported in the summary of significant accounting policies?

A

No

137
Q

What is carrying value?

A

Depreciable base + salvage value - accumulated depreciation

138
Q

How does impairment of an asset affect depreciation?

A

The new depreciable base of the asset is used with a new remaining life

139
Q

Group vs composite depreciation

A

Group - similar assets

Composite - dissimilar

140
Q

How do additional expenditure effect depletion amount per unit?

A

Create a new depreciation rate

141
Q

Depletion items sold vs depletion items produced

A

Only depletion items SOLD cause depletion expense

142
Q

What depreciation method would leave accumulated Depr equal to original cost at the end of the asset’s estimated useful life?

A

If the item has salvage value? None. It would leave AD equal to the depreciable base

143
Q

If nonmonetary exchange occurs, goods received is the recorded at ____ ?

A

Fair value of assets surrendered

144
Q

Involuntary gains requiring entity to purchase another asset - should the gain be netted against the cost of the new asset?

A

No!

145
Q

How are involuntary gains / losses recorded?

A

NBV netted against any costs associated with the transaction - NOT fair value

146
Q

Is sum of years digits recursively applied to carrying balance or applied to depreciation base?

A

Not recursively applied to balance

147
Q

Which of the following use strait-line depreciation?

Group / Composite?

A

Both

148
Q

When a fixed asset in use is impaired, what account is used as the offset of the loss?

A

Accumulated Depreciation

149
Q

What are the two biggest gotchas for depreciation questions?

A

a) double declining balance does NOT remove salvage value

b) Asset acquired after January 1st

150
Q

How to find the “composite life” for a composite depreciation of a group of assets?

A

Sum of total depreciation base / sum of strait line depreciation per year = composite life

151
Q

Is depletion the same thing as depreciation?

A

No

152
Q

Higher book value results in ____ gain and ____ loss

Choose increased or decreased

A

Decreased gain and increased loss

153
Q

Lower book value results in ____ gain and ____ loss

Choose increased / decreased

A

Increased gain and decreased loss

154
Q

Which results in higher book value with no salvage? Sum of years digital or double declining balance?

A

Sum of years digits. Double declining balance is the fastest depreciation method

155
Q

Which Depr. Method results in the highest carrying value? Sum of years digits or strait line?

A

Strait line is the slowest depreciation method, therefore results in the highest carrying value. That means decreased gains and increased losses

156
Q

Should the market value at the end of a lease term be considered “salvage”?

A

No - depreciate over the lower of the lease term or estimated life. Ignore estimated market value at the end of the lease term

157
Q

Intangible assets

A

Long lived legal rights or competitive advantages acquired

158
Q

Legal and registration fees to acquire an intangible are expenses or capitalized?

A

Capitalized

159
Q

Intangible assets created internally are (expenses or capitalized)?

A

General Rule: Expensed. Same as R + D.

Some exceptions

160
Q

Captalizable intangible costs

A

a. Legal fees and other costs related to SUCCESSFUL DEFENSE of an asset
b. Registration or consulting fees
c. Design costs (e.g. of a trademark)
d. Other direct costs to secure an asset

161
Q

When is an intangible amortized?

A

When it has a finite life

162
Q

GAAP and IFRS R + D cost

A

IFRS: can capitalize development cost

GAAP: must be expensed

163
Q

When to amortize goodwill?

A

Do NOT amortized goodwill

164
Q

IFRS vs GAAP intangible revaluation difference

A

IFRS can report with revaluation model instead of cost model

165
Q

Initial franchise fees are …

A

Capitalized for franchisee

166
Q

Continuing franchise fees are…

A

Expenses as incurred

167
Q

Start up costs are…

A

Expenses as incurred

168
Q

Start up costs tax rules

A

$5K deducted, balance amortized over 15 years

169
Q

Exceptions to expensing R + D under GAAP

A

R + D is for a customer = inventory

R + D assets have an ALTERNATE use

170
Q

Not R + D item examples

A

the following are NOT R + D:

  • market research
  • quality control testing
  • reformulation of chems
171
Q

Computer software to be sold costs

A

After technological feasibility is established, capitalize until product is ready for sale. Amortize after product is ready for sale (greater of strait line or % of revenue)

172
Q

Software costs internal use

A

After technological feasibility established, capitalize. Once done, Amortize strait line

173
Q

How is revenue recognized if software developed for internal use is sold to outsiders?

A

Do not recognize a profit until all cost is recovered

174
Q

IFRS software costs

A

Research is expenses and development is capitalized

175
Q

R + D done for you by a third party is

A

Expensed

176
Q

Maintenance of goodwill - expense or capitalize?

A

Expense

177
Q

Internally generated goodwill is expensed or capitalized?

A

Expensed

Only goodwill generated in an arms length transaction is capitalized

178
Q

Organizational costs are expensed or capitalized?

A

Expensed!

Tax: deducted in later years for tax purposes

179
Q

Staff training and salaries related to an acquisition of a patent are expensed or capitalized?

A

Expensed

180
Q

Goodwill can only be created

A

When purchased

(Acquired company’s fair value of net assets

181
Q

R + D goal

A

Generate NEW products / services / techniques

182
Q

If equipment for R + D has NO alternate use it should be

A

Expensed immediately, NOT capitalized over life of the project

183
Q

Redesign of an product prerelease is a ____ expense?

A

R + D

184
Q

What are the two steps for impairment?

A

Step 1: will we recover our investment eventually? (Sum of undiscounted cash flows compared to carrying amount. If not, go to step 2

Step 2: CV less FV = operating loss

185
Q

Difference between intangible impairment GAAP vs IFRS

A

IFRS only has step 2.

GAAP: finite life? Two step. Infinite? Step 2 only

186
Q

Is restoration of impairment permitted?

A

Asset held for disposal: yes

Asset held for use: no

187
Q

Held for sale or disposal differences with impairment vs held for use?

A

a. Can restore value

b. Total carrying loss includes cost to dispose asset

188
Q

What is the recoverability test?

A

For impairment, can we recover our return on investment? (Undiscounted future cash flows vs carrying value)

189
Q

How to calculate IFRS impairment loss?

A

Carrying value is compared to recoverable amount. Recoverable amount is the greater of net realizable value (fair value - disposal cost) or present value of future cash flows (value of asset in use)

190
Q

Does preferred stock have voting rights?

A

No

191
Q

For dollar value lifo, if you have the index and current ending balance, how do you determine the base price ending balance?

A

Current price ending balance / index

192
Q

For dollar value lifo how do you calculate the current value lifo delta?

A

Current ending bal / index = base ending bal

Less base beg bal = base delta

Base delta * index = dollar value lifo delta

Beg bal + dollar value lifo delta = end bal dollar value lifo

193
Q

For moving average how do you calculate the average?

A

Beg inventory balance + purchase / beg units + purchased units = current moving average

Recalculated each purchase and each issue

194
Q

How to calc weighted average periodic

A

Total cost / total units = weighted average

COGS? = weighted average * units sold
End inventory? = weighted average * units in ending inventory

195
Q

Is beg inventory balance used in the determination of weighted average?

A

Yes

196
Q

Difference for when average calculated for weighted and moving are calculated

A 
Weighted = once a month
Moving = each purchase
197
Q

What three columns do you need for dollar value lifo?

A

Base year / current year / dollar value lifo

198
Q

How to calculate the floor for lower of cost or market

A

NRV - ( selling price * profit margin )

Selling price * profit margin = profit margin for the product

199
Q

FOB destination - goods are in transit. Who reports the inventory, customer or seller?

A

Seller owns the inventory until customer takes control as loading dock

200
Q

Group depreciation and composite depreciation are depreciated with which depreciation method?

A

Strait line

201
Q

Would a new engine be considered a repair or an extraordinary repair (capitalizable)

A

It’s capitalizable because it increases the utility of the vehicle

202
Q

When boot is received along with an asset is it added to the book value of the asset?

A

No - it’s recorded as cash:

Cash
Asset
Asset that was given up
Gain (depending on boot % received)

203
Q

If boot was PAID and exceeds 25% of total consideration, is a gain recognized?

A

Yes

204
Q

If the CEO spent 30 hours personally overseeing an R&D project is that time R&D expense?

A

If tracked - yes

205
Q

Under the revaluation model for a finite life intangible, is it amortized?

A

Yes, amortized every year and any revaluation gain / loss will be the new basis of amortization for the next year

206
Q

Amortization expense for a patent credits accumulated amortization - patents or is a direct reduction of patent cost?

A

Accumulated Amortization - Patents

207
Q

If the recoverability test fails and there is impairment, what is the first question one must ask before calculating impairment?

A

Held for disposal or held for use?

If disposal, disposal costs added to impairment

208
Q

Name an example under GAAP when an impairment can be recovered if the value of the asset goes up?

A

The imputed asset is held for sale or disposal. Recovery can only be made to the extent of the original impairment

209
Q

If something has NOT reached technological feasibility, is it research or development?

A

Research

210
Q

Technological feasibility demarcates what?

A

The transition into the development phase of R&D

211
Q

What you must be most careful with bank refs

A

Was it a customer’s check (did we receive) or was it our check (did we pay)?

212
Q

Does accrued property tax on land when land is purchased get added to the capitalized land cost?

A

Yes

213
Q

Does freight in get a speed discount?

A

No - freight is paid separately to the freight company, so the speed discount doesn’t apply UNLESS the freight company offers one too

214
Q

Do discounts gets added to inventory?

A

Yes, items purchased are net of discounts

215
Q

Warehouse rent - period cost or inventoriable cost?

A

Unless it’s manufacturing, period cost

216
Q

How to use selling price to determine cost of goods sold?

A

Selling price * ( 1 - gross profit % )

217
Q

If inventory will be 90% impaired on Jan 1, Y2 - do we record the impairment on Y2 or Y1’s books?

A

Y1’s books to match the impairment loss to the period in which the cost incurred

218
Q

Weighted average of accumulated expenditures. How is the interest rate figured for the excess amount of specific borrowings less the weighted average of accumulated expenditures?

A

Weighted average of other borrowings of the company

FAR MC (10 decks)

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