Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

FAR > F3 - Assets and Related Topics > Flashcards

F3 - Assets and Related Topics Flashcards

1
Q

Overdraft at the bank is considered what and does what?

A

Doesn’t affect cash balance and will be recorded as a liability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Cash equivalents = what?

A

Items without “original” maturities greater than 90 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Allowance for un-collectibles balance =

A

Beg Bal

+Provision for Bad debts

-Bad debt write offs during the year

= End Bal before adjust

Take difference between estimated per agin

= End Bal after adjust

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Writing off un-collectibles does what to net income?

A

Has no effect

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Factoring Receivables w/o recourse does what?

A

Sales transaction that transfers the risk of uncollectible accounts to the buyer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Direct Method: Cash Collections =

A

Sales

-Difference in beg and end A/R

= Cash collected

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Starting with value of a note –> get to the annual payments =

A

= Value / PV Factor

then -

Discounted Amount x Annual Payments

*PV Factor

=Total Interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

When note receivables get discounted.. what do you do with the discount?

A

Subtract it from the maturity value to get to overall proceeds from the bank

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Determining A/R before Allowance for Uncollectibles

A 
B:   Beginning A/R
A:   Additions
       Credit Sales
       Recoveries
S:   Subtracts
       Collections
       Collection of recoveries
       Write offs
       Returns
E: Ending Balance
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Who keeps control of A/R that is pledged in return for a loan?

A

Assigning company (asking for the loan)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What happens to NI and Total Assets when an account is written off?

A

Nothing. Canceling each other out.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Inventory losses during interim

A

MP declines are recognized in period occurred. If they recover, the recognized gains are only to the extent of the original loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Agricultural products and precious metals may be sold at what? And when is the revenue recognized?

A

Above market cost and at production not necessarily time of sale.

=lbs produced / market price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Understated Beg Inventory and Overstated Ending Inventory does what to COGS?

A

Understated: Beg Inv = Understated: COGS (leads to overstatement of GAFS)

Overstated: End Inv =
Understated: COGS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What inventory method most closely approximates inventory costs for COGS and Ending Inventory?

A

COGS: LIFO (most recently purchased is first out)

Ending Inventory: FIFO (oldest inventory is first out, most recent purchases stay in inventory)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

During periods of rising inventory prices: FIFO method under periodic vs perpetual? Ending inventory cost higher/lower?

A

Same ending inventory costs (always).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Inventory: When given GP to get to COGS

A

Sales
*(1-GP%)
=COGS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Inventory prices increasing: what method gives you the lowest ending inventory?

A

LIFO (highest value products being expensed to COGS while lower value ones stay in inventory) also NI decreases as higher values item are being expensed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Dollar value LIFO:

A

(EOY Inventory Cost / BY Inventory Cost)

*Annual increments

+Years together to get value at 12/31

(first year increment is total value)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

COGS =

A 
Beg Inv
\+Purchases
-Purchase Discounts
\+Freight In
\+Transportation to consignees
-End Inv held by consignees
-End Inv
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Lower of cost or Net Realizable Value Inventory Costing

A

Basis vs Realizable value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Who’s ending inventory is consigned inventory in?

A

Consignor (they retain title and risk)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

NRV - Profit Margin =
(Market Value)

(used in Lower of cost and Market)

A

(SP - Cost to sell) - (SP *Profit Margin %)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

IFRS requires use of what method to value inventory?

A

Lower of NRV or Cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
LIFO Perpetual
Use last inventory amounts and values
26
Purchase commitments and losses
Losses are only recorded if the purchaser is obligated to buy a "fixed" number of units
27
Asset Capitalization: Machine
Any cost incurred to make the machine factory ready is capitalized
28
Interest Capitalized for PPE
The smaller of: Total interest incurred and avoidable interest (interest on the weighted-average amount of accumulated expenditures)
29
If the carrying amount amount of a building is known and uninusured what method of accounting for refurbishments is used?
Component and a loss in the amount of the carrying value of the damaged portion of the building must be recognized (capitalize the cost of refurbishing)
30
Interest capitalized in PPE
During the construction period: capitalized as part of historic cost Subsequent to construction: (routine manufacture of machinery) expensed in current period
31
How are Leasehold improvements capitalized?
Over the lesser of amortized life and remaining term
32
IFRS: Gains on revaluation of machinery(PPE), where do these flow?
OCI
33
Revaluation rule for IFRS:
If one asset is revalued, that entire asset class must be revalued
34
Interest incurred to purchase land is what?
Expensed immediately (interest capitalized has to be "connected to a discrete manufacturing activity"
35
How does a lump-sum purchase of land/buildings/inventory work as far as reporting cost?
%FV for each item compared to the total FV between them all.
36
What is the only interest that can be capitalized on construction projects?
Interest during construction (using the rate given for financing the project)
37
What all costs can be assigned to land?
All costs incurred to put it in place including costs to ready it for a building. -Proceeds from sale of salvaged materials
38
IFRS Machinery rule:
Freight cost are capitalized as part of machinery historical cost
39
When asset are purchased requiring fixed payments extending beyond one year, how should they be valued?
PV of all future payments
40
Computing weighted average accumulated expenditures:
Expenditure amount *Portion of the year O/S =Weighted Average (do for all expenditures) if less than borrowed amount. *Interest rate by that amount >interest calculated on borrowed amount? -use original interest
41
Sum of years digits depreciation:
``` (4+3+2+1 =10) Year 1: (4/10) * Base (4 yr ul) Year 2: (3/10) * Base Year 3: (2/10) * Base Year 4: (1/10) * Base ``` =Total Depreciation Expense Purchase Price - (AD) = Carrying Value
42
Double Declining Balance
(Straight Line % * 2) calculate as (% * CV) for each period salvage value doesn't matter!!!
43
A/D Note:
Add depreciation expense to YE accumulated depreciation than subtract next A/D to see YE retirements
44
Group vs Composite Depreciation
Both based on SL but group is for similar assets where composite is for dissimilar
45
Depletion
Sum to the purchase price: Cost of mine +Preparation -Sales Price (salvage value) =Total Cost /Production Estimate for UL =Depletion per unit *amount sold/extracted =Depletion Expense
46
IFRS Component Depreciation
Machinery, Components and Inspection Costs are depreciated separately Make sure.. subtract inspection costs/component costs from original costs
47
Calculation for Composite life:
Total Cost -Salvage Value =Total Depreciation /Life in Years =Annual Depreciation Total / Annual =Component life
48
If depreciation is recorded in one period how is that corrected?
Don't double Depreciation expense!!! Normal amount depreciated! Prior period adjustment because of an error
49
Leased Property Depreciation Note:
Depreciated over the life of the property or lease (whichever is shorter)
50
Unites of Production Depreciation
Reflects that an asset's service potential declines with time.
51
Non-monetary transactions: Receiving cash <10% of total consideration received.
Recognize a gain in the amount determined by the ratio of cash received to total consideration
52
Rule for when a transaction has commercial substance and assets are being exchanged:
(FV of Asset Given - BV) = Gain/Loss
53
Transaction lacks commercial substance, what is done with gains?
If boot collected is >25% of consideration (gain is recognized) if boot collected is not or no boot is collected, find value of new property as plug in JE.. dr New Equipment**(Plug) dr AD cr Old Equipment cr Cash Received
54
When land/property is sold: what happens to the replacement property?
Its carrying amount is equal to the FV of the consideration given for it.
55
When should an exchange be measured by the reported amount of the non-monetary asset surrendered?
When it lacks commercial substance.
56
IFRS non-monetary exchanges: Dissimilar Assets
Seen as exchanges to produce revenue (cash and asset given up) so you recognize gains/losses
57
R&D Expenses include
Costs to develop products, services performed by 3rd parties, pre-production prototypes and model costs and searching for new products or new process alternatives, Salaries of lab employees
58
Trademark Amortization
Amortized over economic life
59
What costs are capitalized for Patents?
Legal Fees and other costs associated. R&D costs are expensed
60
R&D and depreciation:
Don't depreciate equipment used only for project. Depreciate equipment used for now and the future
61
Goodwill
Goodwill acquired is capitalized but generated internally is expensed
62
Franchise Fees:
Expensed (aren't capitalized with the Franchise, only depreciation is)
63
Under GAAP how are costs associated with software development accounted for?
Costs during preliminary project stage are expensed and costs afterwards are capitalized and depreciated over the economic life of the product
64
How are start-up costs treated?
Expensed w/o/e
65
IFRS Payment Expenses/Capitalized Costs
Capitalized costs = Purchase price +VAT Taxes +Legal Costs
66
R&D Expenses Exclude (capitalization):
Legal fees for patent application, Engineering follow-up early stage of commercial production and marketing, producing product masts for training materials
67
Goodwill is created when:
A business is acquired.
68
Costs incurred between the time technological feasibility is reached and the product is released, are what?
Capitalized. Any before or after TF are expensed.
69
Subsequent reversal of impairment losses are what under GAAP?
Prohibited unless the intangible is held for sale/asset is held for disposal. IFRS: impairment losses can be reversed (and are booked to the CY income statement)
70
Goodwill at the reporting unit level and FV:
Companies should determine whether the FV of the reporting unit is less than the CV, if so record an impairment loss to the I/S and reduce goodwill on the B/S
71
What kind of assets can the recover-ability test be applied?
Assets with limited life-spans
72
What happens when there is a permanent impairment loss on a piece of machinery? With a recoverable amount?
Depreciate the recoverable amount over the remainder of the useful life.
73
How to determine if there is an impairment loss:
FIRST: Compare carrying value to expected future cash flows. CV < PVFCF (undiscounted) = no impairment CV>FV = impairment
74
IFRS and impairment loss:
Impairment loss has occurred when: CV < Recoverable amount (Greater of the (FV - Costs to sell) or PVFCF) CV - Recoverable Amount = Impairment Loss
75
What long-lived assets can have their values recovered?
Held for disposal (not held for use)

FAR (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions