FAR 1 Flashcards
How to calculate profit/loss on Discontinued operations
Once discontinued is approved take profit/loss from that year plus any impairment on assets.
How asset or liability on percentage of competition method is calculated
if the sum of cumulative costs incurred plus cumulative Gross profit recognized exceeds cumulative billings exceeds the excess is reported as a current asset,
if the cumulative bills exceeds the sum of cumulative costs incurred plus cumulative gross profit recognized, the difference is reported as a current liability. if two amounts are equal no assets or liab is recognized.
how freight in and freight out are reported?
freight in = COGS
freight out = Selling expense
Is Change from LIFO to FIFO allowed if done to improve share holder return and stipulate share price?
Although the change in the company’s inventory valuation method from LIFO to FIFO is a change in accounting principle, an accounting principle may be changed only if required by GAAP or if the alternative is preferable and more fairly presents the information. If the company is changing its method of valuation presumably because it expects COGS to decrease, improving net income, shareholder return, and stock price, then the change in accounting principle is not acceptable.
How change from FIFO to LIFO is treated?
Change in accounting principle that is accounted for prospectively, like a change in accounting estimate because it is too difficult to calculate the cumulative effect of the change
How a previous error in accounting is treated in current year?
An error requires retrospective adjustment, not prospective adjustment. and adjustment is applies to Beg retained earnings.
When is the software cost Capitalized?
How is the software cost amortized?
> Software costs are capitalized once technological feasibility is established.
It is amortized using the greater of the straight-line amortization over the useful life of the software or the percentage of estimated sales achieved.
Which statement of non-for-profit entity is same as commercial?
Statement of activities/ Income Statement.
