FAR ② Flashcards
which of the following does not accurately represent the mechanics of either the remeasurement(temporal) method or translation (current rate) method when translating a foreign subsidiary’s financial statements?
A. under the remeasurement method, the exchange rates used for the balance sheet and income statement are primarily dependent on whether the account is a monetary or nonmonetary item.
B. a currency gain/loss account is plugged into the income statement under the remeasurement method to ensure that the retained earnings account is in balance on the balance on the balance sheet.
C. all balance sheet account items are translated using the current year-end rate under the translation method.
D. under the translation method, the income statement accounts are translated first followed by the balance sheet accounts.
[C]
[remeasurement method]
1. begins with the balance sheet
2. monetary items @current exchange rate,
_cash
_A/R
_A/P
_long-term debt
3. nonmonetary items @historical rate
_depreciation expense
_marketable securities
_PP&E
_accumulated depreciation
_CS
_PS
4. Retained earnings are a plug number to get the balance sheet to balance.
[tranlate method]
1. income statement first
2.balance sheet:CS &PS @historical rate
other@current rate
3. income statement @weighted average exchange rate
Converge Corp. sold a $100,000 bond at 95 and incurred $3,000 of bond issuance costs. which of the following is correct?
A. a debit to cash is booked for $100,000
B. an asset is booked for $3,000
C. The discount of $5,000 is amortized using the straight-line method over the life of the bond.
D. the discount of $8,000 is amortized using the effective interest method over the like of the bond.
[D]
dr: cash 92,000
dr: discount 8,000
cr: bonds payable 100,000
a government-wide statement of net position must include which of the following?
A. Prior-year comparative financial data.
B. Primary government fiduciary fund data.
C. a consolidation of all government-wide activities.
D.a distinction between governmental and business-type activities.
[D]
C purchased 10,000 shared (2% ownership) of R.
received a stock dividend of 2,000 shares and CV of $35, MFV of $40.
R paid a cash dividend of $1,5 per share on Sep, Y1.
What amount should C report as dividend income?
18,000
stock dividends are not recorded as income on the books of the recipient.
Partnerships
goodwill method
what amount should be recorded as goodwill to the original partners?
E: 45
F: 25
New partner R has 25% and invests 30.
[20]
goodwill method
total capital= new gay/ rate
A U.S. public company needs guidance in accounting for and reporting a complex derivative transaction that it entered into with a European subsidiary. this company is most likely to find the appropriate guidance in the :
A. FASB Accounting Standards Codification.
B. International financial reporting standards
C. FASB statement of financial accounting standard.
D. FASB statements of financial accounting concepts.
[A]
what amount of dividend revenue should report in the Y1 income statement?
・stock dividend of 400 shares from O on July 25, Y1, when the market price of P’s shares was $20 per share day owns less than 1% of P’s CS.
・a cash dividend of $15,000 from L which the company owns a 25% interest. a majority of L’s directors are also directors of the company.
[0]
1. stock dividend is not reported as revenue, only a memo entry is made.
2. cash dividend reduces the investment account but does not affect revenue.
in a company’s notes to its financial statements, the first note described significant changes in accounting policies related to valuations of inventory and plant assets. Subsequent notes included a separate note detailing inventories and a separate note detailing plant assets. for which of these subsequent notes, if any, should the company duplicate a description of its changes to significant accounting policies?
1. both the plant assets note and the inventory note.
2. neither the inventory note nor the plant assets note.
[2]
the first or second note of the financial statements is the summary of significant accounting policies and includes information regarding measurement bases used in preparing financial statements. the company will not duplicate the information provided in this note in later footnotes. instead, the company will present calculations of the inventory and plant assets amounts that reflect the new policies.
財務報表的第一個或第二個附註是重要會計政策的摘要，包括有關編制財務報表所用計量基礎的信息。 公司不會在以後的腳註中重複本說明中提供的信息。 相反，公司將提供反映新政策的庫存和工廠資產金額的計算。
lease for 3 years and the economic life of the equipment is 4 years. the lease contains a written purchase option that intends to exercise. Over how many years should depreciate the leased equipment?
4
assets(such as property taxes receivable) associated with unavailable revenues(such as property taxes collected more than 60 days after year-end) should be recorded by crediting:
1. a deferred outflow of resources
2. an increase to non spendable fund balance.
3. an allowance
4. a deferred inflow of resources.
[4]
dr: accounts receivable
cr: deferred inflows of resources
which of the following transactions is an expenditure of a governmental unit’s general fund?
1. transfer from the general fund to a capital projects fund.
2. routine employer contributions from the general fund to a pension trust fund.
3. operating subsidy transfer from the general fund to an enterprise fund.
4. contribution of enterprise fund capital by the general fund.
[2]
1. transfer within other financing uses.
3. transfer within other financing uses.
4. transfer within other financing uses.
income tax expense = 175
taxable income = 420
tax rate of 35%
deferred tax asset/liability?
a temporary difference?
DTL 28
a temporary difference 80
CS 100,000 shares of $5par value on current year
1. May 1 1,000 shares of treasury stock were sold for $10,000
2. July 9 10,000 shares of previously unissued common stock were sold for $12 per share.
3.October 1 The distribution of a 2-for-1 stock split resulted in the common stock’s per share par value being halved.
P accounts for TS under the cost method. Laws in the state of P’s incorporation protect shares held in treasury from dilution when stock dividends or stock splits are declared.
in P’s December 31 statement of stockholders’ equity, the par value of the issued common stock should be:
1.275,000
2.550,000
3.291,000
4.518,000
[$550,000]
shares
100,000
10,000
110,000
_______________
220,000
因爲分紅導致股價折半，所以從5par value 變2.5
in consolidating the worksheet, what amount of unrealized intercompany profit was eliminated?
應該從以下哪個角度進行？
1. A/R
2. inventory
3. revenues
4. COGS
5. gross profit
inventory
in which of the following funds should the debt service transactions of a special assessment issue for which the government is not obligated in any manner to be reported?
1. trust fund
2. internal service fund
3. general fund
4. custodial fund
[4]
when the governmental unit is not obligated in any manner for the special assessment debt, it acts as custodian of the resource related to the special assessment. in this case, a custodial fund should be used to report the debt service transactions.
當政府單位對特別評估債務沒有任何義務時，它作為與特別評估相關的資源的託管人，在這種情況下，應使用託管基金來報告償債交易。
Progressive Township prepares its financial statements in accordance with GASB 34. As a result, the town’s financial statements will:
1. display combined financial statements by fund type in government-wide financial statements.
2. include the net book value of its general governmental assets in its general fixed asset account group.
3. Include a comparison of the town’s budgeted and actual performance including disclosure of the originally adopted budget and all amendments included in the financial amended budget.
4. include a mandatory comprehensive transmittal letter as part of its required supplementary information that focuses on the positive elements.
[3]
financial statements prepared in accordance with the provisions of GASB 34 will include: 1.government-wide financial statements prepared using accrual basis accounting, 2.fund financial statements,
3.noted to the financial statement,
4.and required supplementary information that encompasses a letter titled ‘management’s discussion and analysis and budget versus actual comparisons including the display of the originally adopted budget and the changes that resulted in the final amended budget.
根據 GASB 34 的規定編制的財務報表將包括：使用權責發生製會計編制的政府範圍的財務報表、
基金財務報表、
財務報表中的註釋
以及包含標題為“管理層的討論和分析和預算與實際比較，包括顯示最初採用的預算以及導致最終修訂預算的變化。
under the regulation S-X, an entity’s annual financial statements filed with the SEC should include, at a minimum, two:
balance sheets ×2Y
statement of income, changes in owners’ equity, and cash flows × 3Y
a six-year finance lease entered into on December 31, year 1, specified equal minimum annual lease payments due on December 31 of each year. the first minimum annual lease payment, paid on December 31, Year 1 consists of which of the following?
1. interest expense(yes/no)
2. lease liability (yes/no)
NO+Yes
留意日期，利息并未產生
A public entity sells steel for use in construction, one of its customers accounts for 43% of sales, and another customer accounts for 40% of sales. what should the entity disclose in its annual financial statements about these two customers?
1. the payment terms of accounts receivable due from each of the two customers.
2. the names of two customers
3. the amount of the entity’s revenue from each of the two customers.
4. the financial condition of the two customers.
[3]
concentrations in the volume of the business with a particular customer should be disclosed in the notes to the financial statements because these two customers individually contribute to significant sales. these concentrations increase the risk of loss, and information stating that fact should be disclosed to the financial statement user.
interest revenue?
a $20,000, 8%, 5-year note that required five equal annual year-end payments of $5,009. the note was discounted to yield a 9% rate to L. at the date of purchase, L recorded the note as its present value of $19,485.
total payments = 5009×５＝25045
principal paid at PV (19485）
interest revenue 5560
asset turnover= ?
asset turnover= net sales÷average total assets
a domestic-based company used the translation method to report its foreign subsidiaries, which of the following would not be done when translating each foreign subsidiary’s financial statements to US dollars under the translation(current rate) method?
1. Roll forward the retained earnings account by transferring net income to this account
2. plug translation gains to other comprehensive income with losses reflected as a retained earnings adjustment.
3. use the historical rate to translate the common stock and additional paid-in capital accounts with all other asset and liability accounts translated using the current year-end rate.
4. convert all income statement accounts at the weighted average exchange rate during the year.
[2]
under the translation method, the translation gain or loss adjustment is plugged to other comprehensive income.
Sherman Inc. had the following transactions related to the construction of the new warehouse during the year. The warehouse construction began on March 15 and ended on August 31.
- Borrowings to finance the construction
$265,000 - Interest incurred from 3/15 through 8/31
$11,000 - Interest incurred from 9/1 through 12/31
$8,500 - Total cost of labor, materials, and overhead to construct warehouse $305,000
- Costs incurred to grade and pave the driveways and parking lots $40,000
- Costs to repair the water line ruptured during excavation $8,000
Interest incurred from 3/15 through 8/31 $11,000
The total cost of labor, materials, and overhead to construct the warehouse 305,000
_________________________________________
Capitalized cost of warehouse
$316,000
an XBRL financial statement exhibit is required to be submitted with all of the following SEC fillings, except:
1. form 10-k
2. form 6-k
3. form, 3,4 and 5
4. form 20-f
[3]
form3, 4, and 5 are required to be filed by directors, officers, or beneficial owners of more than 10% of a class of equity securities of a registered company. These forms fo not contain the registered company’s financial statements because they are not filed by the company, and therefore are not required to present the company’s financial statements in an exhibit prepared using XRBL.
on Dec 1, Y2, C purchased supplies from A for 5,000 euros. on that date, the spot rate was 0.9.
Feb 1, Y3 rate was 0.95
Dec 31, Y2 rate was 1.02
what amount of foreign currency transaction gain(loss) is reported on C’s income statement for the year ended Dec 31, Y3?
350
Y2 buy = 4500
Y2 end = 5100
Y3 pay = 4750
gain =350
which should include in a general fund’s encumbrance account?
1. outstanding vouchers payable amounts
2. outstanding purchase order amounts
3. Excess of the amount of a purchase order over the actual expenditure for that order
[2]
1. outstanding vouchers payable amounts represent actual obligations which are included in “vouchers payable” or “account payable”
3. once an “actual expenditure for that order” has taken place(which means the goods or services have been received), the encumbrance is reversed and the actual expenditure is recorded as vouchers or accounts payable.
Lyons Youth Association(LYA) is a sports youth organization for boys serving the Lyons Township community for the past 75 years. the five elected members of the Lyons Township town council serve as the board of governance of the LYA. the budget of the LYA is approved by the town council. assuming that LYA is a separate legal entity, the Lyons Township financial statements would most likely address the relationship between the township and the LYA as:
1. a footnote presentation
2. excluded from the Lyon’s Township financial statement because LYA warrants primary government presentation,
3. a component unit and LYA would be displayed using discrete presentation
4. a component unit and the LYA would be displayed using blended presentation.
[4]
里昂青年協會（LYA）是一個為里昂鎮社區服務了75年的男孩的體育青年組織，由里昂鎮鎮議會的五名當選成員擔任LYA的治理委員會，經鎮議會批准。假設 LYA 是一個獨立的法人實體，里昂鎮財務報表很可能將鄉鎮與 LYA 之間的關係表述為：
although LYA is a separate legal entity, it qualifies as a component unit as a result of its financial interdependence with the town.
in addition, blending criteria are met: the board of the component unit(LYA ) is substantively the same as that of the primary government( Lyons Township)
儘管 LYA 是一個獨立的法人實體，但由於其與該鎮的財務相互依賴，它有資格成為一個組成單元。
此外，符合混合標準：組成單位（LYA）的董事會與基層政府（里昂鎮）的董事會實質相同
assuming that a company has a gain or a loss on a hedge transaction(i.e., asset, foreign currency, or future cash flows) during the current year that is expected to unwind next year, which of the following hedge instruments would reflect this gain or loss in its entirety in the current year’s income statement?
1. foreign exchange cash flow hedge
2. fair value hedge
3. foreign exchange net investment hedge
4. cash flow hedge
[2]
any gains or losses from a fair value hedge instrument, as well as any offsetting gain or loss on the hedge item, are recognized in their entirety in the current year’s income statement.
1,4: gains and losses related to cash flow hedges are reported as a component of other comprehensive income until the hedged item affects earnings.
與現金流量套期相關的損益作為其他綜合收益的一部分報告，直到被套期項目影響收益為止。
on Jan 1, Y2 P purchased 10% of C’s Common Stock.
on Aug 1, Y2 P purchased additional shares bringing its ownership up to 40% of C’s CS.
during Ocr, Y2 , C declared and paid a cash dividend on all of its outstanding common stock. how much income from C investment should report in Y2 income statement?
?% from when to when
[40% from Aug1 to Dec31, Y2 only]
when significant influence is acquired, the equity method is adopted from the date and going forward. Retroactive adjustments are not required.
consolidate financial statement total current asset:
P+S+inventory adjust to FV
each of the following is an example of a tax position taken by a corporation except for:
1. an allocation or shift of income between jurisdictions
2. the characterization of income, or a decision to exclude reporting taxable income, in a tax return.
3. a decision to classify a transaction, entity, or other position in a tax return as tax exempt.
4. presumption that the relevant taxing authority will examine the tax position and has full knowledge of all relevant information.
[4]
presuming the relevant taxing examine the tax position is an element of the two-step approach to recognizing tax benefits and is not an example of a tax position.
假設相關稅收檢查稅收狀況是確認稅收優惠的兩步法的一個要素，而不是稅收狀況的一個例子。
which of the following constraints under GASB 54 imposes an internal limitation on the used of equity/assets of a governmental fund(balances) established by the highest internal governing authority?
1. assigned
2. non-spendable
3. committed
4. restricted
[3]
GASB 54 下的以下哪些限制對使用由最高內部管理機構設立的政府基金（餘額）的股權/資產施加了內部限制？
under a committed category constraint, an internal limitation on the fund balance assets(equity ) of a governmental fund is established by the government’s highest decision-making authority.
1: this represents an intended constraint on governmental fund balance assets established by the (internal) government without a formal commitment.
- this is a practical constraint where current governmental fund assets can not be spent are expiring. a non-spendable fund balance constraint is considered the highest order of constraint.
4: this level of constraint is a restriction on governmental fund assets imposed by external authorities.
1：這代表了（內部）政府在沒有正式承諾的情況下對政府基金餘額資產的預期約束。
2. 這是一個實際的約束條件，即當前不能使用的政府基金資產即將到期。不可支出的資金餘額限制被認為是最高級別的限制。
4：此級別的約束是外部當局對政府基金資產施加的限制。
the presentation of government-wide financial statements prepared using a uniform method of accounting and measurement focus in combination with both fund-based financial statements that used the method of accounting and measurement focus appropriate to the particular fund type along with appropriate reconciliation is best referred to as:
1. the public accountability approach
2. the integrated approach
3. the segregated approach
4. the financial reporting Pyramid.
[2]
the joint presentation of government-wide and fund financial statements and appropriate reconciliation is called the integrated approach.
4: financial reporting Pyramid was the reporting model used prior to the introduction of GASB#34 reporting standards. the pyramid was comprised of individual, combining, and combined or general purpose financial statements, which essentially built from a broad of information to, condensed summary information similar to a pyramid.
which of the following is an example of a transaction involving a market participant?
1. a company purchases real estate zoned for recreational use.
2. a company purchases a commercial rental property from a company that is owned by the same shareholders.
3. a judge orders a company to sell machinery during a bankruptcy proceeding
4. a company sells land to a local government to satisfy an outstanding tax lien.
[1]
market participants are buyers and sellers acting in their economic best interest who are independent (not related parties), who are knowledgeable about an asset or liability, and who are willing and able to transact for that asset or liability.
市場參與者是為他們的經濟最大利益行事的買方和賣方，他們是獨立的（非關聯方），他們了解資產或負債，並且願意並能夠就該資產或負債進行交易。
use the percentage of completion method
a construction contract of $18,000
progress billings 6,600
cost incurred 5,400
collections 4,200
estimated costs to complete 10,800
what amount of gross profit should be recognized?
[600]
in complying with GASB 34, a government will present separate fund financial statements for its governmental and proprietary funds. the purpose of this presentation is to :
- document the prioritization of general revenue allocations
- provide internal transfer pricing data regarding individual internal service funds,
- demonstrate compliance with legal regulatory or other budgetary compliance features of the government’s administration of its finances.
- report additional and detailed information about the primary government.
[4]
separate fund financial statements should be presented for governmental and proprietary funds to report additional and detailed information about the primary government.
the statement changes in accumulated plan benefits for D company’s pension plan shows a beginning balance of 4500 for actuarial PV of accumulated plan benefits.
plan amendments 350
changes in actuarial assumptions 140
benefits accumulated 220
benefits paid out to retirees 180
?the year-end balance for the PV of accumulated plan benefits will be equal to?
5030=4500+350+140+220-180
