F8 Flashcards
Simple vs Complex capital structure
Simple- Only has common stock outstanding. These entities only report Basic EPS
Complex- Has either convertible securities, warrants, options, contracts that can be settled with stock, or contingent shares. These entities must report Basic and Diluted EPS
Diluted EPS calculation with convertible bonds
Add bond interest expense net of tax to numerator.
Add weighted average shares outstanding to be converted to denominator
Diluted EPS calculation with convertible preferred stock
Add back preferred dividends to numerator.
Add number of shares outstanding to be converted to denominator.
Ignore taxes.
Weighted Average Number of Common Shares Outstanding Calculation
Add Shares sold during period (time weighted based on fiscal year)
Subtract reacquired shares (time weighted based on fiscal year)
Add stock dividends and stock splts (retroactively adjust)
Subract reverse stock splits (retroactively adjust)
Contingent shares for reporting EPS
Enter into the calculation for Basic EPS if all conditions are met. Examples:
Shares issuable upon issuance of a patent
Shares issuable upon achieving a net income target
Shares issuable upon time passage
Operating assets and liabilities
Operating asset- All current assets except cash and cash equivalents
Operating liability- All accruals except interest bearing liabilities (these are financing activities)
IFRS accounts that may be reported on SCF in more than one place
Interest/Dividends Received- Operating or Investing
Interest/Dividends Paid- Operating or Financing
Taxes Paid- Operating, Investing, or Financing
Types of Not-For-Profit entities
Health Care Organizations
Some Educational Institutions, such as religious colleges
Voluntary Health and Welfare Organization
Labor unions
Museums, libraries, performing arts organizations
Professional organizations, such as AICPA
Net Assets with Donor Restrictions
Assets that are subject to specific, externally imposed limitations made by the external donor
Restrictions include a particular operating activity, specified term or period, assets used for a specified purpose
Ways Not For Profit organizations must classify expenses
Functional- categorizes costs by major classes of program and support services
Natural- Categorize costs by instrument, i.e. salaries, utilities, interest, etc.
Reclassifcation of Restrictions Rules
Donor restrictions that are met in the same period received can be classified as assets without donor restrictions.
Perpetually restricted net assets are not reclassified because donor restrictions never expire.
Contribution definition
An unconditional transfer of cash or assets, where collection is certain, to a new owner, in a voluntary, nonreciprocal matter
Donor restrictions vs Conditional promises
Conditional promises are resolved by a future and uncertain event occurring, and are classified as a Refundable Advance (liability) until then.
Donor restrictions are satisfied by the organization using the donated resources.
Recipient Entity
A not for profit entity that accepts assets from a resource provider and either transfers assets to or uses on behalf of a specified beneficiary.
Recipients credit Refundable advance liability when receiving a donation.
Endowment Funds
Assets that are established to provide income to maintain an organization. Can be established in perpetuity or a specified period of time.
