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Becker - FAR > F5 > Flashcards

F5 Flashcards

1
Q

Jewelry Unlimited sells a $10,000 bracelet and collects 7 % sales tax; prepare journal entries

A

Dr. Cash 10,700
Cr. Sales Revenue 10,000
Cr. Sales Tax Payable 700

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2
Q

Payroll Journal Entries

A 
Weekly Payroll
Dr. Salaries & wages expense
Cr. FICA
Cr. Withholding payable
Cr. Cash

Employer tax expense
Dr. Payroll expense
Cr. FICA
Dr. Unemployment

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3
Q

Bonus Method

A

B = 10%[100,000 - 40%(100,000 - Bonus)]

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4
Q

Criteria for post-employee benefits

A
  • rights to receive compensation is based on services already rendered
  • obligation relates to rights that vest or accumulate
  • payment for compensation is probable
  • amount can reasonably be estimated
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5
Q

Criteria for recognizing liability associated with exit & disposal activities

A
  • obligating event occurred
  • event results in a present obligation to transfer assets or provide services in the future
  • entity has little or no discretion to avoid the future transfer of assets or providing of services
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6
Q

Loss contingency when given a range with no better estimate

A

Accrue the minimum amount and disclose a note for the difference between the minimum and max

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7
Q

Premiums - coupon shit

A

Total number of coupons issued multiplied by the estimated redemption rate equals total estimated coupon redemptions

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8
Q

When should you record warranty costs?

A

At the date of sale

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9
Q

What is the contingent liability for a discounted note receivable?

A

Its maturity value

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10
Q

How to calculate estimated warranty liability

A

Estimated warranty cost minus actual warranty costs

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11
Q

How to calculate interest revenue

A

Total payments minus present value of principle

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12
Q

How to calculate annual payments for interest problems

A

Face amount divided present value factor of ordinary annuity at face value %

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13
Q

Question that has a face value and a discounted amount

A

For note receivable use face value and its % and for income from loan use the discounted amount and its %

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14
Q

Discounting note with straight line deprecation

A

First you multiply the face amount by the discount percentage. Then you subtract that from the face amount. Then you amortize discount amount based on issue date and add back

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15
Q

Asset retirement obligation(ARO) formula

A
  • multiply the estimated payment by present value of 1
  • multiply present value by %(risk adjusted rate)
  • divide present value by useful life
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16
Q

ARO journal entires

A

To record ARO
Dr. Asset retirement cost -PV of 1
Cr. Asset retirement obligation

Accretion and depreciation expense 
Dr. Accretion expense
Cr. Asset retirement obligation
Dr. Depreciation expense
Cr. Accumulated depreciation

To record dismantling
Dr. Asset retirement obligation
Dr. Dismantling expense
Cr. Cash/Accounts Payable

17
Q

Exit or disposal activities

A
  • involuntary employee termination
  • costs to terminate a contract that is not a lease
  • coasts associated with exit or disposal activities, including costs to consolidate facilities or relocate employees
18
Q

Interest receivable journal entries

A

Dr. Note receivable
Dr. Interest receivable
Cr. Revenue

19
Q

What equals note receivable at any time?

A

Present value of remaining monthly payments equals note receivable - FACE VALUE SHIT

20
Q

Interest revenue earning with discount

A

Present value of payments divided by payment times discount rate

21
Q

How to solve discount problems

A
  • Multiply face value by discount rate and subtract from face value
  • multiply discount total by discount amortization and add to the above
22
Q

Bond Discount

A

Market rate is higher than the stated rate

23
Q

Bond Premium

A

Market rate is less than the stated rate

24
Q

Price of bond when issued

A

Sum of present value of the future principle payment plus present value of future interest payments

25
Q

Journal entry for bonds when stated and market rate match

A

Borrower
Dr. Cash
Cr. Bond Payable

Investor
Dr. Investment in bonds
Cr. Cash

26
Q

Journal entry for issuing bond at Discount with interest payments

A

Issuer
Dr. Cash
Dr. Discount
Cr. Bond Payable

Dr. Bond interest expense - market
Cr. Discount on bond payable
Cr. Cash - face

Investor
Dr. Investment in bonds
Cr. Cash

Dr. Cash - face
Dr. Bond investment
Cr. Bond interest revenue - market

27
Q

Journal entry of issuing bond at a premium with interest payments

A

Issuer
Dr. Cash
Cr. Premium
Cr. Bond payable

Dr. Bond interest expense - market
Dr. Premium
Cr. Cash - face

Investor
Dr. Investment in bonds
Cr. Cash

Dr. Cash - face
Cr. Investment in bonds
Cr. Bond interest revenue - market

28
Q

Carrying value with premiums and discounts

A

Premium is face plus unamortized premium and discount is face minus unamortized discount

29
Q

Bond issuance costs

A

Reduction in carrying value of bond like a discount and included in entry with discount

30
Q

Bond issued between dates

A

On the date of the issue you include the interest from the date it was dated

Dr. Cash
Dr. Discount
Cr. Bond payable
Cr. Bond interest expense - interest from bond date to issue date

You record interest expense from bond date to interest payable date

Dr. Bond interest expense
Cr. Cash

31
Q

Effect of neglecting to amortize bond premium

A

Amortization of premium on bonds payable reduces both interest expense and carrying value, of it its not done then both the interest expense and carrying value are overstated

32
Q

Accounting for debtor in restructuring - transfer of assets

A

Recognize gain for the difference in payable and FV of asset given up and the difference on the books between FV & BV is reported in income for the period

33
Q

Accounting for debtor restructuring - transfer of equity

A

Recognize gain for the difference between payable and FV of equity interest

34
Q

How can creditors measure impairment for restructuring if foreclosure is not probable

A

Not probable

  • loans market price
  • fv of collateral if the loan is collateral dependent

Probable
- fv of collateral

35
Q

Gain for troubled debt restructuring

A

Carrying amount minus total future cash payments equal gain

Becker - FAR (10 decks)

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