f5 Flashcards
Unrealized gains and losses on available-for- sale (AFS) securitiees are recorded in
OCI (net of tax)
trading securities are held at
fairvalue in balance sheet
unrealzied gains and losses from trading securities are recognized in
earnings
the current expected credit losses (CECL) model requires recording a loss when the amortized cost exceeds
the present value of expected future cash flows
Equity method is used when
when the company has significant control over company (usually 20%-50%)
Whenever a company gains significant influence of a company when is the equity method recognized
from the date acquired
When consolidating financial statements what is eliminated?
100% of all inter company balances among members of the consolidated group are eliminated
How do you calculate the consolidated equity account
Parent company equity account plus non-controlling interest
two methods when admission of a new partner
bonus method
goodwill method
bonus method
when the purchase price is more or less than the book value of the capital account purchased, bonuses are adjusted between the old and new partners capital accounts and do not affect partnership assets
goodwill method
goodwill is recognized based upon the total value of the partnership implied by the new partners contribution.
When an intracompany transfer takes place a fixed asset cost is based on the
original cost from the outside world and remains the same on the consolidated financial statements.
Dividend revenue, under the fair value method, should be recognized to the extent of
cumulative earnings since acquisition and return of capital beyond that point.
intraperiod income tax allocation is shown:
net of tax
deferred tax expense is due to temporary differences between
GAAP and tax accounting
deferred tax expense =
increase in deferred tax liability - increased in deferred tax asset
effective tax rate =
income tax expense / pretax income
When taxable income > pre tax income this means?
it’s a deferred tax asset
When taxable income < pretax income this means?
it’s a deferred tax liability
assets contributed by a partnership to a corporation in its formation are valued at the assets
FMV less any liabilities assumed by the corporation.
Stock issued is credited at par value and any difference is credited to APIC
when recording dividend recognition under the FV method it should be recognized to the extent of cumulative earning since
acquisition and return of capital beyond that point
under the equity method the investor records revenue to its
“share of the investee’s earnings” not dividends received
under equity method dividends reduce the
carrying value of the investment
In the sale of securities you should include the
commission and sale taxes associated
The fv method issued used whenever 20% or less is owned by an investee the investment will be carried in
FV thorugh net income. Earnings are not recorded and dividends are considered income and don’t afecr the income statement
supplemental disclosure of reconciliation of net income to net cash is provided on when the
direct method is used under US GAAP
