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FAR > F3 > Flashcards

F3 Flashcards

1
Q

Components of a Simple Book reconciliation

A

+ Bank collections
- Bank service charges
- Non-sufficient funds checks
+ Interest Income

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2
Q

Cash equivalents

A 
Money market funds
Deposits that are not legally restricted
Bank checks and Bank drafts
Treasury bills
Certificates of deposits with original maturities of 90 days or less
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3
Q

Pledging

A

Company uses existing A/R as consignment for a loan. Still retains ownership as long as they comply with loan.
Requires disclosure only, no change to A/R

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4
Q

Factoring A/R

A

Selling A/R without recourse for less money than they are worth- risk of not collecting all A/R

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5
Q

With Recourse

A

Buyer has option to sell any uncollectible accounts back to the seller- similar to collateral

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6
Q

Discounting notes receivable calculation

A

Discount= Maturity value (principal + interest) x Buyer’s rate x Remaining time until maturity

Amount to be paid by buyer = Maturity value - discount

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7
Q

Factoring without recourse journal entry

A

DR: Cash, Due from Factor, Loss on sale of receivable
CR: Accounts receivable

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8
Q

Factoring with recourse criteria

A

Seller’s obligation for uncollectible accounts can be estimated
Seller surrenders control to the buyer
Seller can only be required to replace uncollected receivables with other assets

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9
Q

When to use LCNRV

A

IFRS- always

US GAAP- when using FIFO or weighted average cost

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10
Q

When to use LCM

A

US GAAP- When using LIFO or retail

IFRS- Never

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11
Q

Periodic vs Perpetual Inventory

A

Periodic: Determine inventory by physical count, Record one JE at time of sale
Perpetual: Update inventory for each purchase, 2 JE at time of sale (for revenue and for inventory)

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12
Q

COGS calculation Periodic Inventory

A 
Beg. Inventory
\+ Purchases
= Cost of Goods Available for Sale
- Ending Inventory
= COGS
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13
Q

LIFO conformity rule

A

If LIFO is used for tax purposes, it must also be used in the financial statements

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14
Q

Purchase commitment

A

A legally enforceable agreement to purchase a specified amount of goods at some point in the future
Forward contract, must be disclosed

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15
Q

Costs included in cost of land

A

Broker’s commissions
Title and recording fees
Legal fees
Renovation costs getting it ready for use
Subtract proceeds from sale of existing material
NOT: Debt issuance costs

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16
Q

Costs included in Building

A

Costs of excavation (digging up for land)
Repair charges and building improvements
Architect’s fees
Construction period interest

17
Q

Costs included in Equipment

A 
Freight in and insurance while in transit
Installation charges
Testing and preparation for use
Sales taxes
Construction period interest
18
Q

Costs included in Land Improvements (depreciable)

A 
Fences
Water systems
Sidewalks
Paving
Landscaping
Lighting
19
Q

Sum of the years digits depreciation

A

(Cost - Salvage) x Remaining life/(total useful life)!

20
Q

Depletion Base

A

Cost to purchase property
+Development costs on land
+ Estimated restoration costs
- Residual value of land (after extractions)

21
Q

Unit depletion rate

A

Depletion base/

Estimated recoverable units

22
Q

Lacking commercial substance

A

An exchange where projected cash flows are not expected to change significantly following the exchange

23
Q

Gains on exchanges without commercial substance

A

If no boot is received, no gain is recognized.
If boot paid is less than 25% of total value, no gain is recognized.
If boot is received but less than 25% of total value, proportion of the gain is recognized
If boot received or paid is greater than 25% of total value, both sides recognize the total gain

24
Q

Costs to capitalize

A

Purchased intangible assets
Initial franchise fees
R&D material and building costs that can be used alternatively in the future
Contractual R&D costs (projects taken for others)
Computer software producing after technological feasability

25
Q

Costs to expense

A 
Internally developed intangible assets
Continuing franchise fees
Start up costs
R&D costs
Computer software design, planning, testing
Organization costs
26
Q

US GAAP computer hardware and software R&D

A

Computer hardware- No R&D costs can be capitalized

Computer software- R&D costs can be capitalized after technological feasability

27
Q

IFRS computer hardware and software R&D

A

Capitalize hardware and software R&D costs after technological feasability

28
Q

Recoverability test

A

Tests if the sum of undiscounted expected cash flows from the asset exceeds its carrying value.
(If it doesn’t, asset is impaired)
Only used under US GAAP
Only used for finite lived assets

29
Q

IFRS Impairment process

A
  1. Determine recoverable amount: Greater of fair value less costs to sell or value in use (PV of future cash flows)
  2. Impairment loss = Carrying value - Recoverable amount

FAR (10 decks)

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