F8 Flashcards
Diluted EPS=If Basic EPS’ll go down
(Income for common shareholders +Interest saved)/WASCO if all diluted securities were converted
Savings to numerator:
- Options/Warrant-nothing to save. Use Treasury method. Reduce # of shares bought for proceeds/Mkt Price
- Convertible bonds. Save on interest expense (add back net of tax interest*(1-Tax) plus discount. Use if converted method. Earliest convertible date
- Convertible preferred stock. Save on dividends. Add back 100% of saved dividends. Use if converted method. DIVIDENDS ARE NOT TAX DEDUCTABLE. IGNORE TAX RATE.
Diluted EPS.
Denominator:
Diluted if:
*Options Strike Price
If Antidilutive Securities (increase basic EPS) or option is out of the money
Ignore, Do not include in EPS calculation
Basic EPS
Always take into account Cumulative Preferred Stock Dividends even if it was not declared
Basic EPS if Stock dividends given
Stock dividends apply to all manupulations with stock except buying back (TS). Calculate wacso without dividend coefficient, then* 1.05 if 5% dividends minus treasury stock
EPS for comparative FS
If stock split happen in 2nd year, 1st year stock needs to be adjusted to split s well for comparison
Stock split and Dividends
Apply to the beginning of the year or even beginning of prior year if comparative FS
Multiply all changes to split/dividend stock %, e.g. Treasury stock sold
Statement of cash flow
Operating – This section displays the cash effects of the line items that make up the calculation of net income.
Investing – This section displays the cash effects of non-current asset transactions, such as purchases and sales of fixed assets and investments and lending activities.
Financing – This section displays the cash effects of borrowing, or paying back debt, and buying or selling the equity of the company.
Gain from sale of using equipment in cash flow statement
Reported as deduction from bet income from operating activities
Difference GAAP vs IFRS
GAAP-operating. IFRS-Investing:
Interest Received
Dividends Received
GAAP-operating. IFRS-Financing:
Interest Paid
GAAP-financing, IFRS operating or financing: Dividends paid
GAAP-Operating. IFRS-Operating, Inv or Financing depending of activities
Taxes Paid
Direct method. Ignore Net Income, Depritiatin, G/L
- Cash received form customers. Inflow.
Revenue
(-Increase in AR + Decrease in AR) change
(+Increase in unearned rev-Decrease in unearned revenue)
- Cash Paid to suppliers and employees:
COGS
+Increase in inventory (buying outflow) more money spend
-Decrease in inventory (selling inflow)
-Increase in AP (borrowing inflow)
+Decrease in AP (payment)
+Increase in Allowance for uncollectable accounts (reduce AR contra Asset account)
Salaries and Wages Expense
-Increase in wages payable +/-Change in Wages Payable
+Decrease in wages payable (Payroll)
Direct method
\+Interest/Dividends received \+Trading securities sold \+Insurance proceeds -Interest paid (decrease cash) -Income Tax paid (decrease cash) -Cash paid to buy trading securities (decrease)
Other Operating Expenses
-Decrease in Prepaid Exp +Increase in Prepaid Expense
+Decrease in Accrued Liabilities -Increase in Accrued Liabilities
Indirect method
DO NOT DOUBLE COUNT:
Dividends received (already in net income)
Gain/Loss on sale of Trading securities if Cash from Trading securities given
Net Income \+Depreciation/Amortization \+Loses -Gains -Amortization of Bonds Premium -Equity Earnings \+/- Change in OA(except cash/cash equialent) \+/- Change in OL (Payables) except interest bearing: notes, bonds.
Operating Cash Flow
Trading securities Interest income Interest Expense Dividends received Gain/Loss on sale of used equipment
Investing Cash Flow
Purchasing/Selling PPE
Purchase of somebody’s stock, Long term, nontrading securities
Financing Cash Flow (own debt)
Loans,
Paying Principal on Debt
Issuing Stock/Repurchasing Stock
Paying Dividends
No Net cash flow. Disclosure in Supplemental info
Depreciation
Increase in Lease Payable-just disclose (no cash)
Record income of equity method
Operating Cash Flow
Net Income
+Plus AR (got no cash)
-Minus AP (saved cash)
*IFRS -Paid Dividends
Disclose in Supplementary info if
PPE was purchased in exchange of stock=# of stock* FV of stock
Operating CF under direct method
Cash received from customers - minus Cash paid to Suppliers- Other Cash Payments (Income Tax Paid, Interest Paid)
Beginning Cash + Change in Cash=Ending CASH
do not include any gain in direct
Income Tax Payment=Earning Before Tax-Net Income= Income Tax Expense-increase in Interest Expense Payable
- Cash received
Revenue
+Decrease in AR
+Dividends received - Cash Paid to suppliers
COGS
-Decrease inventory
-Increase AP - Other
- Interest paid
- Taxes Paid
Cash Received under direct method
Revenue
-Increase in AR
+Increase Unearned Rev
+Sale of trading securities
A change in a debit balance account has the OPPOSITE effect on the net balance of cash.
• A change in a credit balance account has the SAME effect on the net balance of cash.
Calculating change in OA/ OL
Fundraising expenses in NFP
Classified as supporting activities
Support services
Fundraising, administration, management, and membership development
Program cost=Mission of organization
Salaries of staff
NFP
All expenses reported as decrease in assets without restrictions
Board designated amounts. Ignore board’s decision.
It is a class within without donor restrictions
Must be kept intact
Forever restriction
Gift received over next 5 years
With donor restriction (time)
NFP Cash Flow
Operating same as commercial. including interest earned, paid and received dividends
Investing Activities-Insurance
Financing Activities
Cash contribution with donor restriction
Fundraising expenses-to encourage contributions. Unsolicited merchandise to encourage contribution.
Printing catalog, CPA report- SG&A expense
Income, % from donor restricted asset
income form donor restricted principal
is also restricted
Restricted cash
Non current asset
Fundraising Expense-Maintain Donor List
Soliciting- membership development cost
Conditional donation (conditionwl promise,matching) not recognized as revenue. And if received on behalf of 3rd party
Refundable advance
Conditional pledges and receipts are never recognized as revenue.NO JE REQUIRED
Only unconditional, then conditions are met
Gifts without donor restrictions
Non operating revenues
Unconditional pledges received in next years
Reported as pledges resevable at PV
Total revenue, gains and other support without donor’s restrictions
Service revenue
-Minus duplicated revenue, already included
+Plus other revenue
+Net assets released from donor’s restrictions
Non profit contribution includes
Unconditional, nonreciprocal, voluntary, non ownership of investment
Do not include provision for bad debts and bad debt expens
In calculating NFP revenue
Recognize contribution revenue only if
SOME needed (Skills, otherwise needed, may be valued,
Interest income in debt securities in NFP
Change in FV + interest income
The measurement focus of governmental type funds
Is on determination of
- Current financial Resources
- Financial Position
Volunteer recruitment
Always fundraising regardless of SOME criteria
Three categories of revenue
- Patient service revenue
- Other operating revenue (includes donated supplies)
- Non operating revenue (includes donated service)
Net patient service revenue
Gross- charity care-contractual adj (do not include provision for bad debt, it is an expense)
Persuade to remit
get cash
Board designation doesn’t affect classification on restricted/without restriction by donor
Only external donor
Income from investment was received
Increase in revenue, gain, other support without donor restriction
Funds provided for building expansion used to purchase a building
Increase in rev, gain, other support (building bought, restriction satisfied)
Hospital received investment subject to donor’s requirement that investment income be used to pay for outpatient services
Increase in net assets with donor restrictions with possible additional endowment fund disclosures
NFP All expenses are recognized as changes to net assets without donor restrictions.
Earnings with donor restrictions used in a manner that satisfies the donor’s stipulations are reclassified out of net assets with donor restrictions into net assets without donor restrictions to fund the expense.
NFP. Restricted endowment from a donor who stipulated that earnings are to be used for program services. University spend $30K on program from earnings.
- Expenses without donor restrictions $30K
- Net assets without donor restrictions reclassed from restrictions $30K
- Net assets with donor restrictions
Investment earnings $60K
-Unrealized loss (FV fell)
-Reclassification of net assets for satisfied donor restrictions $30K
___________________________
Change in net assets with donor restrictions -$70K
NFP. Earnings related to cash originally contributed unconditionally. Principle remain intact while earnings must be used to fund construction of the building
Net asset class
WITH DONOR RESTRICTION (restriction for purpose)
NFP. Conditional promises provided to a not-for-profit organization do not represent a receivable revenue or net assets until the conditions are met.
Not classified as net assets
NFP. Unconditional promises to pay over a period of time are generally classified as with donor restrictions as to time until collection.
With donor restrictions
If Board of Governance set aside some money or made other decision
Without donor restriction
NFP. Beneficiary accounting
DR Receivable
CR Contribution Revenue (Contribution, Beneficial interest, change in interest in net assets)
NFP. What amount of change in net assets should should be reported?
Endowment
+Realized income
+Appreciation
-Expenses
