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FAR > F7 > Flashcards

F7 Flashcards

1
Q

Actual return on asset for pension plan

A 
Beginning Assets
\+Contribution
\+Actual Return (squeeze)
-Benefits paid
=Ending balance
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2
Q

Accumulated Benefit Obligation

A

PV of future retirements payment based on current and past compensation levels

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3
Q

Projected benefit obligation

A

PV of future retirements payment based on current and past and FUTURE compensation levels

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4
Q

Return on Plan Asset (BS Asset) FV of Plan Asset

A 
Beginning balance
\+Contribution
\+Return (market)
-Benefits paid
=Ending Balance
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5
Q

BS liability (Projected Benefit Obligation)

A 
Beginning balance
\+Service cost
\+Interest cost
\+Prior service Cost 
\+Actuarial losses
-Actuarial gains
-Benefits paid
=Ending Projected Benefit Obligation
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6
Q

Unrecognized gain/loss is amortized over avg remaining service life.

A

Recognized only EXCESS OF 10% of PBO liabilities/Market Related Value (greater)
Unrecognized gain/loss
- 10% 0f PBO or Mkt related value (Greater)/# of years
=Amortization of unrecognized gain/loss

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7
Q

Amortization of Existing Net Obligation

A

Projected benefit obligation
-FV Plan Asset/15 years of Avg employee job life (greater)
=Minimum amortization

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8
Q

Net Periodic Service cost

A

+Service Cost Current
+Interest Cost (Discount RateBeg PBO)
-Expected Return on Asset (Expected RateBeg Assset)
+Amortization of Prior Service Cost (strait line)
-Amortize UNRECOGNIZED Gain/Loss in OCI (corridor greater 10%of Beg bal Asset or PBO ) If it’s less-Ignor
+Amortization of Existing Net Obligat/Asset FV/# years of 15
years (greater)
=Net Periodic Pension Cost

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9
Q

Funded Status

A

Asset- PBO

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10
Q

Actuarial gain/loss-include Net in PBO Base calculation

A

Amortization of Prior Service Cost/Existed Net obligations included in Net Periodic Pension Cost

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11
Q

Amortization of actuarial gain/loss

A

include in Net Periodic Pension Cost

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12
Q

PBO vs Plan Asset formula

A

The only similarity - Benefits paid

The rest of the components are different

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13
Q

Net Gain to be reported in OCI

A

Difference Actual Return on Asset (squeeze formula) - Expected Return on Asset (Beg FV of Asset*Expected Rate)

DR Pension Liability/Asset
CR OCI

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14
Q

Pension Gain/Loss can be recorded in OCI

A

Unrecognized Prior Service Cost -Increase of PBO DR OCI/CR Pension Obligation
Unrecognized Prior Gain
DR Pension Liability/CR OCI

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15
Q

Net Periodic Pension Cost

A 
\+Service Cost
\+Interest Beg PBO*Discount
-!Expected Return on Asset
\+Amortization of Unrec Cost/Avg years
-! Amortization of Unrec Gain/Avg years
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16
Q

Under IFRS

A

Gain/Loss are not amortized from OCI to IS

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17
Q

Amortization of unrecognized gain in OCI is equal

A

Beginning of OCI
+CURRENT period gains
-Amortization (squeeze)
=Ending OCI balance

DO NOT INCLUDE GAIN FORM PRIOR PERIOD

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18
Q

Net Periodic Pension Cost is measured using

A

PBO. Service cost represents increase in PBO resulting from service in current yeat

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19
Q

FV PBO ending

A 
Beg PBO
\+Service Cost
\+Interest
\+Current Period Cost
-Current Period Gain
-Benefits Paid
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20
Q

Current/Prior period Gain/Loss and Amortizations run through

A

OCI

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21
Q

Prior Service Cost and Pension loses/ Gains Recognition in BS

A

JE Recognition
DR OCI (Goes to AOCI)
CR Pension benefit Asset/Liability

JE Amortization to SIRAGE
DR Net Periodic Pension Cost
CR OCI (Take out of AOCI)

JE Recognition of Gain
DR Pension Asset/ Liability
CR OCI

JE Amortization to SIRAGE
DR OCI
CR Net Periodic Cost

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22
Q

Pension Accounting Relationships

A

Income Statement SIRAGE
Balance Sheet BASE/PBO
Equity AOCI Unrecognized cost/gain/

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23
Q

Accumulated benefit obligation

A

Is not used to compute funded status

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24
Q

Pension Plan Liability Reported if

A

a negative funded status exists PBO and Asset as of end of the year

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25
Q 
Reported in AOCI
Amortization of the net gain decrease OCI (out of OCI, Reclass adjustment)
A

-Gain/ +Loss
Prior Service Cost (minus amortization)
Net transition asset/obligation

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26
Q

Amortization of prior service cost (Unrealized Prior cost sitting in OCI we need to more/amortize 1 year portion to Expense

A

DR Net Periodic Cost

CR OCI

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27
Q

Amortization of gain

A 
1 JE 
DR Liability
CR OCI
2 JE Amortization
DR OCI
CR Net Periodic Pension Cost

IF CURRENT PERIOD GAIN
DR Asset
CR OCI

28
Q

Actuarial GAIN JE

A

DR Pension Liability
CR OCi

DR OCI
CR Net Periodic Pension Cost

29
Q

Underfunded Plan (Liability) report non current. Report Current only shortage for next year payment

A

Pension plan with positive balance

Always reported as NON CURRENT Asset

30
Q

A company will record DR to OCI in case of Amortization of prior period net gain

A 
1) To record Gain
DR Pension Asset
CR OCI
2)Amortize prior period gain in future:
DR OCI
CR Pension Cost
31
Q

JE CR to OCI will result from

JE for actual return higher than expected

A

DR Pension Asset/Liability
CR OCI (gain)
Do not take in to account Tax Rate

32
Q

Calculating change in funded status (A-L)

A 
Take in to account only:
Prior Service Cost!
IGNOR (It's Net Periodic Cost):
Amortization of Net loss
Amortization of Prior Service Cost
33
Q

For Cunnent/Noncurret Assets Liability in BS

A

Use funded status

34
Q

Attribution Period for Post retirement Benefits

A

From date of hire till date when employee became eligible and PRB assigned

35
Q

Retained earnings

A

Net income
-Dividends declared
+/- Adjustments of prior period
+/- Accounting changes reported retrospectively

36
Q

Gain/Losses on Treasure Stock

A

NEVER RECORDED IN INCOME STATEMEN
Gain-additional paid in capital
Loss-1st AP in Capital, then Retained earnings

37
Q

JE for Treasury Stock Cost Method

Under Cost Method Ret Earnings NEVER GO UP, Gain Increase APIC

Use Ret Earnings only in Resell JE in Cost method

A
  1. Shares Issued
    DR Cash
    CR Common stock (par)
    CR APIC Com Stock
  2. Shares Purchased back
    DR Treasury Stock (cost/Price)
    CR Cash
  3. Reissued Sold Back above cost NO RETAINED EARNINGS!
    DR Cash
    CR Treasury Stock(cost)
    CR APIC (SP-Coast)
Reissue sold back below cost
DR Cash
DR APIC TS (FROM PRIOR JE)
DR Retained Earnings above cost
CR Treasury Stock
38
Q

JE for Treasury Stok Par Value Method

Use Ret Earnings only in bought back par method

A
  1. Shares Issued
    DR Cash
    CR Common stock (par)
    CR APIC Com Stock
2. Shares Purchased back
DR Treasury Stock (par)
DR APIC (Par-Issue price JE1)
DR Retained Earnings (plug)excess of APIC  
CR Cash
  1. Reissue of shares
    DR Cash
    CR Treasury Stock
    CR APIC (SP-PAR)

If Reissue below price DR APIC Treasure Stock 1st and then Plug Retained ernings

39
Q

Book value per share common stock

A

Common stockholders Equity/Common Shares Outstanding

40
Q

If reacquisition price is less than Par/original issue price gain CR to APIC

A

DR Treasury stock at par
CR APIC
CR Cash

41
Q

If reacquisition price is more than Par/original issue price loss DR to Retained Earning

A

loss DR to Retained Earning

42
Q

Participating preferred stock splits dividends with common stock shareholders only AFTER

A

Common stock shareholders received dividend equivalent to preferred stock dividends

43
Q

JE to record the retirement of shares under cost method

A

DR Common stock #par
DR APIC #(SPpar)
DR Retained earnings (plug)
CR Treasury Stock # purchased price

44
Q

Repurchasing common stock outstanding by issuer

A

Will lower total stockholders equity and total capital available, as the treasury stock is the contra asset account. Debt/ Equity account Increases

45
Q

JE for stock retirement

A

DR Stock
CR APIC (plug)
CR Cash Paid

46
Q

When you calculating Book Value per common share

A

Deduct Preferred Stock , Preferred St Dividends and Bonuses

47
Q

In Reissuing (selling again) stock under cost method if price below cost

A

CR APIC

CR Ret Earnings (Remainder)

48
Q

Under Cost Method

A

Only APIC T/S!

49
Q

JE Stock Dividends Issued

A

DR Retained Earnings

CR Common Stock

50
Q 
Stock Dividends
JE
DR Retained Earning
CR Common stock
CR Paid in Capital
A

Small Stock Dividend less than 20%FMV

Dividends greater than 25% Par

51
Q

Stock dividends declaration

A

FMV of stock dividend at declaration date transfers from Retained Earnings to Capital Stock and APIC.

52
Q

Paid stock dividends

A

Increase APIC, Decrease Retained Earnings

53
Q

Stock dividends and stock splits are not considered as income for recipients

A

Dividends are not recorded at FA in any method (Cost or Equity)

54
Q

2 to 1 stock split

A

Double # of shares e.g. 100,00 beginning balance, after 2 to 1 split =200,000

55
Q

Small stock dividend less than 20%

A

Reduce Retained Earnings at FV Price=#of shares*FV
DR Retained Earnings
CR Common Stock
CR APIC

56
Q

Calculate # of common stock shares ISSUED

A

Issued shares (Do not reduce for treasury stock and do not include sold treasury stock)
Add + New stock issued
+Stock split if 2 to 1 (#*2)

57
Q

If property dividends distributed

A

Take Market value- Book value to calculate gain/loss on disposal

58
Q

Calculate the # of common stock shares outstanding

A

Issued
-Treasury stock
+Sold unissued previously
* Split 2 to 1

59
Q

Cost of stock rights formula=

A

(FMV of rights/(FMV of rights+FMV of stock ex-rights))*Cost of Stock

60
Q

At what amount Note Receivable s/b reported in BS?

A

If Note Receivable > 1 year

FV+interest accrued for all years*PV annuity factor

61
Q

Benefit Pension Plan in OCI

A

Unrecognized Gain favorable for OCI
DR PBO (Liability)
CR OCI

Unrecognized prior period cost
DR OCI
CR PBO Liability

62
Q

Government accounting

A

Government wide FS-Operational

Funds-Fiscal accountability

63
Q

Net Cash receipts of bond issuance

A

Sales Price+Accrued interest if bond issued not in January-Bond Issuance cosrt

64
Q

lower of cost or market

A

Middle value of:

  • replacement cost
  • market ceiling NRV (Price-Cost to complete)
  • market floor NRV-Profit
65
Q

GASB 34

A

Report additional and detailed info about primarily government

FAR (12 decks)

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