F3 - Assets and Related Topics Flashcards
How do you determine impairment loss?
- Perform Recevoerability Test: long-lived asset’s carrying amount exceeds its recoverable amount (undiscounted future cash flows).
- Calculate Impairment Loss: Carrying Amount - FV less Costs to Sell
Are you allowed to record a restoration of previously recognized impairment losses?
No, subsequent reversal of an impairment loss is prohibited, unless the asset is held for disposal.
HOw should a company report bank account balances in their B/S if they have two separate banks?
The balances for various accounts within a single bank can be netted, and each bank must be accounted for separately when one of them has a negative position. Checking/operating and saving accounts within a bank are netted. If the overall bank’s balance is negative, it is reported as a liability.
How are the proceeds of a note receivable discounted received from the bank?
The discount is always applied on the maturity value. Thus, take the maturity value less the discount % (not the note rate %).
How do you calculate invetory at dollar-value LIFO?
1) Deflate the year-end inventory prices by dividing the index provided
2) Take the prior year-end LIFO inventory to calculate the difference in increase for this year and multiply it by the inflation price index.
3) Add the LIFO inflated increase for the year to the beginning of year inventory
How do you calculate weighted average method?
weighted average cost per unit = COG available for sale / Number of units available for sale
Units in ending inventory x weighted average cost per unit.