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FAR > F4 > Flashcards

F4 Flashcards

1
Q

DEbt securities on the balance sheet classified as trading or available for sale are valued how?

A

fair value

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2
Q

On what statement are unrealized gains/losses on debt securities classified as trading securities recognized

A

income statement

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3
Q

How are unrealized gains/losses on debt securities classified as Available for sale securities recognized

A

OCI baby

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4
Q

DEbt securities on the balance sheet classified as held-to-maturity are valued how?

A

amortized cost

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5
Q

List the three conditions when losses on debt securities classified as Available for sale are recognized in income on the IS, and NOT in OCI

A

when the security is sold, it becomes a trading security, or there is an OTTI decline in value to below cost (impairment)

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6
Q

When a marketable security is transferred from trading to available for sale or vise versa at what cost is it being transferred

A

its transferred at Fair Value, which is the new basis.

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7
Q

How do you calculate the realized gain or loss calculated for trading & equity securities when they are sold

A

Original cost +/- adjusted cost (which is the unrealized gains or losses previously recognized in NI)

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8
Q

How do you calculate the realized gain or loss calculated for Available For Sale Securities when they are sold

A

Selling price +/- the original cost

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9
Q

How are equity securities typically valued

A

carried at fair value through net income with unrealized gains and losses included in earnings

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10
Q

Describe the practicality excepition for equity securities

A

its for securities that dont have a readily determinable FV, exceptions allow for the entity to measure them at cost less impairment, of identical or similar investments

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11
Q

How are nonliquidating and liquidating dividends distributed by equity securities by the person receiveing them

A

nonliquidating dividends are recorded as dividend income

Liquidating dividends received are recorded as a return of capital

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12
Q

How do you calculate year-end investment in investee reported on the BS under the equity method

A

Beginning investment in invest
ADD: Investors share of investee earnings
LESS investors share of investee dividends
LESS amortization of FV differences
=Ending investment in investee

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13
Q

How do you calculate an investors equity method investment reported on the income statement

A

Investors share of investee earnings
LESS amortization of FV differences
=equity in earnings / investee income

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14
Q

What are some of the criteria for consolidating subsidiaries

A

parent controls more that 50% of sub

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15
Q

What is a variable interest entity

A

its a business that doesnt have investors with voting rights or lacks sufficient financial resources to support acitivites

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16
Q

In aquistion accounting state the consolidating workpaper elimination entry

CARINBIG

A 
Dr: Common stock - sub
Dr: APIC - sub
Dr: RE - sub
Cr: Investment in sub
Cr: Noncontrolling interest
Dr: Balance sheet adjustment to FV
Dr: Identifiable intangible assets to fair value
Dr: Goodwill
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17
Q

How is noncontrolling interest as of the acquisition date calculated under GAAP (Balance Sheet)

A

Non-controlling intrerest = FV of subsidiary x NCI %

18
Q

How is noncontrolling interest on the income statement calculated

A

Subsidiary net income x Noncontrolling interest % = NCI in net income

19
Q

How is noncontrolling interest as of the acquisition date calculated under IFRS (Balance Sheet)

A

there are two methods: full goodwill or partial goodwill
Full Goodwill: FV of subsidiary x NCI %
Partial Goodwill: FV of subs net identifiable assets x NCI % or Acquistion cost - FV of net assets required

20
Q

How is goodwill calculated under GAAP

A

FV of Sub - FV of subs net assets

21
Q

What is the elimination entry for intercompany inventory transactions

A 
Dr: RE
Dr: Intercompany Sales
Cr: Intercompany COGS
Cr: COGS
Cr: Ending inventory
22
Q

What is the elimination entry for intercompany bond transactions

A

Dr: Bonds PAyable
Dr: Premium (or credit discount)
Cr: Investment in affiliates bonds
Cr: gain on extinguishment of bonds

23
Q

What is the elimination entry for intercompany depreciable assets transactions

A

DR: intercompany gain on sale
Cr: Machine
Cr: Acc depr

then do elimiation of depreciation

DR: Acc depr
CR: Depreciation expense

24
Q

With what percent of ownership comes the use of the equity method

A

20 to 50 %

25
Q

Where does Trading security end up on classification on BS? and marked at what value

A

Current Asset generally, at Fair Value

26
Q

Where does AFS security end up on classification on BS? and marked at what cost

A

Current or noncurrent asset, at fair value

27
Q

Where do the unrealized gain or loss go on an AFS if it is sold? if it is still being held?

A

realized G/L on IS if sold, if not sold it goes to equity (U in PUFIER)

28
Q

How do you record an unrealized gain or loss on a trading security

A

Dr: Unrealized loss on trading security
Cr: Valuation Account (fair value adjustment)

To NI

29
Q

How do you record an unrealized gain or loss of AFS Security

A

Dr: Unrealized loss on trading security
Cr: Valuation Account (fair value adjustment)

to OCI

30
Q

How do you calculate the expected credit loss?

A

PV - Amortized Cost

31
Q

How do you record a normal nonliquidating dividend

A

Dr: Cash
Cr: Dividend Income

32
Q

How do you record a liquidating dividend, meaning the dividends are greater than retained earnings

A

Dr: Cash
Cr: Dividend Income
Cr: Investment in Corp

33
Q

Unrealized Gains and losses on equity securities are included where

A

in earnings on the IS as they occur

34
Q

What method is used on reporting if you own 20% or less,

A

Fair Value

35
Q

What method of reporting do you use if you own LESS than 20% BUT you have significant influence??

A

you ue the Equity Method

36
Q

When using the equity method, and the investee reports income and dividends paid out in cash, what is the impact on the amount of your investment

A

if you receive cash dividends, it reduces the amount of your investment

if you are recognizing investee’s portion of net income, it increases the amount of your investment

37
Q

For the equity method, what is the difference between the purchase price of investment and the fair value? what is the difference between the Fair value of the investment and the Net Book Value?

A

The difference between the purchase price and FV is GOODWILL

The difference between the purchase price and NBV is the premium paid on the investment

38
Q

When doing the CAR part of the conosoldated elimination entry, what are the CAR formulas?

A

Assets - Liabilities = CAR

or just net assets = car

39
Q

how is ending NCI determined after the acquisition date?

A

Beginning NCI
+NCI share of NI
-NCI share of dividends
=ending NCI

40
Q

Uner IFRS how is goodwill impairment testing done at the Cash Generating Unit Level?

A

impairment is recognized when the carrying value is greater than the recoverable amount. This impairment loss is first allocated to goodwill, and then distributed across other assets

FAR (15 decks)

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