FAR 11 Flashcards
What footnote disclosure is required in the F/S for pensions? What would not be included?
A detailed description of the plan including employee groups covered, the amount of unrecognized prior service cost and the components of net periodic pension cost
Not included would be the difference in executive and non-executive plans.
What is the rule for a stock dividend less than 20-25% of the the total stock outstanding?
Only affects Retained earnings since the FMV of the stock dividend at declaration date is moved from R/E to capital stock and APIC.
Does not affect stockholders equity b/c all transfers take place within stockholders equity.
Assets are not affected.
What is shown in The Statement of Changes in Net Assets available for benefits show?
Benefits paid to participants, contributions from the employer and participants, and the net change in FV of each significant class of investments.
Nothing to do with the change in PV.
For Par Value Method for buying treasury stock what is the J/E?
Buying back Stock:
Dr Treasury Stock (@ Par Value)
Dr APIC - C/S (@ initial difference of Par And market Value)
Cr Cash ($ Paid to reacquire stock) Cr APIC - T/S (Difference in difference of initial FV price - Buy back price if it is less)
What is the J/E for reissuing T/S?
Dr Cash
Cr Treasury Stock @ PAR Cr APIC - C/S @ difference btw par and selling price
Which items if dilutive and other conditions are met would be included into W/A shares outstanding for basic EPS?
1) Stock options
2) Contingent Shares
Contingent shares that are dilutive are included in the calculation of basic EPS if all conditions of issuance are met.
Stock option do not end into the calculation of basic EPS but will be entered into dilutive EPS only if the market price of C/S > Exercise price of the option.)
What is the Financing activities made up of in a cash flow statement?
Reflect cash flows form non-current liabilities and equity activities.
ex: Principle Payments on Notes Payable
Where would a company report net periodic pension costs for the year? Where is the funded status reported?
No reported on any single F/S
Net periodic costs are reported on the company’s income statement
Funded status (Plan assets relative to plan’s obligations) is reported on the Balance sheet.
How is compensation expense under a compensatory stock option/ purchase plan program measured annually?
At fair value Options using FV pricing model such as the Black-Scholes option pricing model
When using the Par Value method and stock is purchased back for more than it was originally issued what are the accounts debited if there was no balance in the APIC - T/S account?
Dr APIC - C/S
Dr T/S @ Par
Dr R/E (Plug or what is left over) *** only amount goes here if APIC T/S is 0 or reduced to 0
Cr Cash Paid
What is the purpose of the statement of cash flows?
Provide relevant information about the cash receipts and cash disbursement of an enterprise during an accounting period.
When a property dividend is declared and the market value of property exceeds its book value what is the effect? Is APIC and Net Income Affected?
Increase Net Income for the period, APIC is not affected
What is the J/E for granted stock options?
What is the J/E for stock options exercised using an acceptable pricing model?
Dr Compensation Expense XXX
Cr APIC - Stock Options XXX
J/E for Exercising of stock options:
Dr Cash (FV per share @ date of granting stock options)
Dr APIC - Stock Options (Compensation Expense)
Cr C/S (At Par) Cr APIC - PLUG
When is the If-Converted method used for calculating Diluted EPS for stock options outstanding?
When the exercise price of the stock options < average market price per share
Options are “in the money” and all of the stock option shares would be added to denominator in EPS
What is the Cost method when recording Treasury Stock?
Dr T/S for the FV price per share.
Cr Cash
Reissuance:
Dr Cash
Dr R/E - When there is a loss
Cr T/S
Are gains and losses on Treasury stock transaction ever recorded on the I/S?
No, G’s and L’s are never recorded on the I/S.
Gains are recorded by increasing APIC - T/S
Losses are recorded by eliminating balance in APIC - T/S than decreasing R/E
What does the direct methods starting point?
What is the indirect methods starting point?
The direct method starting point is net sales. - includes items that directly affect operating cash flows
The indirect method starts with net income. - Removes the impact of noncash items affecting the net income total
What supplemental disclosure is required when indirect method is used for cash flows?
Cash paid for net interest payments and income taxes is required
How are collection an pieces of art recorded on the statement of cash flows when not capitlized?
In the investing section of cash flows.
Costs of collection items purchased as a decrease in the appropriate class of net assets
Proceeds from sale of collection items as an increase in the appropriate class of net assets
Proceeds from insurance recoveries of lost or destroyed collection items as an increase in the appropriate class of net assets
How are Multi year pledges recorded for a NFP? When is revenue recognized?
Recorded at the net present value the year received. Revenue is also recognized in the year it is received.
When restricted is reclassified as unrestricted, this is not recognizing revenue in later years.
What does the matching and cost eligibility requirements indicate the existence of?
Both represent measurable performance-based barriers or other barriers that indicate the existence of a condition
What is the J/E for NFP’s when they are recording an AFDA for pledges Receivable?
Dr Pledges Receivable
Dr AFDA
Cr Contribution Revenue
Contributions that require a future even to take place are considered conditional and how should a NFP record this contribution?
Conditional not included in contributions and recorded as refundable advances (liability)
if conditions are not satisfied in the agreed upon period.
Conditional promises are not recognized
What are the three most generally used revenue classifications for hospital?
Patient services revenues, other operating revenues and non-operating revenues
Other operating revenues: generated by operations other than patient services
ex: Revenues from educational programs,
Non Operating revenues: incidental earnings not related to the ongoing and central operations of the hospital
ex: Gifts without donor restrictions
How are expenses recorded by a NFP regarding donations?
Always recorded as without donor restrictions, once the portion that was restricted was used for its intended use.
For a NFP what would qualify as salary and wage expense?
Donated services are recorded as a contribution and expense if part of the normal operations of the NFP or would otherwise be done by salaried employees.
Special event work done is not included.
What is the J/E for a 100% stock acquisition that has registration and legal fees attached to the transaction?
Divide FMV by total shares = Market Value per share
Dr Investment in Sub (FMV of shares)
Dr Legal Expense
Cr C/S (At Par)
Cr APIC (APIC - Registration Fees)
Cr Cash (PLUG)
Using dollar value FIFO what do you multiply the price index % by? Beg inventory at adoption or the increase in inventory?
(Increase in inventory * %) + Beg inventory at adoption = Y/E inventory on BS
For NFP’s how are marketable equity security’s measured on the f
At the value of fair value on the date of the statement of financial position.
Also at fair value on the date donated.
Pay attention to the dates and what the question is asking related to the fair value of the donated marketable security.
Quoted prices is the best measure of FV.
What causes net assets to increase on the statement of financial position of a NFP for marketable securities at year end?
Gains + Dividends + interest income = Increase in Net Assets
What is variance power for a NFP?
Discretion in how they use donated funds from another person or organization with donor restrictions. They choose where the donation is going oppose to holding in to it for a certain amount of time and then transferring it.
How are gains and losses classified for a purchased restricted endowment fund?
If there are no restrictions by law or by the donor, gains and losses should be presented in the statement of activities as increases or decreases in Net Assets WITHOUT DONOR RESTRICTIONS
