FAR Flashcards
Retake
What amount of loss should the company report as discontinued operations in the December 31, Year 5, income statement?
Add the operating loss and the loss from disposal of the business, discontinued operations are always reported net of tax so take the income tax off of the loss.
What is reported in OCI
Unrealized gains and losses on debt securities classified as available-for-sale are recorded in other comprehensive income.
10-Q report needs to be filed when for an accelerated filer?
For the 10-Q report, both large accelerated and accelerated filers have 40 days to issue the report. For the quarter ending June 30, 40 days after June 30 is August 9 (31 days in July and 9 days in August).
When should dividends be recorded?
When they are declared
What is the purpose of reporting comprehensive income?
To summarize all changes in equity from nonowner sources. Therefore, comprehensive income includes all net income plus any components of other comprehensive income, the “PUFI” items. Comprehensive income would not include investments by stockholders (owners) nor distributions or dividends to stockholders (owners).
Cost method
Original issue: JE
Cash Debit
Common stock Credit
additional paid in capital Credit
Buy back (treasury stock): JE
Treasury stock Debit
Cash. Credit
Reissue treasury stock above cost : JE
Cash Debit
Treasury stock Credit
Additional paid in capital Credit
Reissue below cost: JE
Cash debit
Additional paid in cap debit
retained earnings debit
treasury stock credit
Basic earnings per share with newly issued stock
earnings per share must be adjusted by the number of months the shares have been issued. __/12
What makes up the comprehensive income
Includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The exchange of common stock for productive assets represents a transaction with owners specifically excluded from comprehensive income.
When do accelerated filers file the 10-K and 10-Q
Accelerated filers have 75 days after the fiscal year-end to file their annual report (10-K) and 40 days after the fiscal quarter ends to file their quarterly report (10-Q).
Change in accounting estimate is applied in which way?
prospectively for the current period and going forward.
Dilutive security
Produces an earnings per share that is below the basic earnings per share
Conceptual Framework: consistency
The conceptual framework aids to ensure that standard setters preparers managers auditors and other users of the financial statement are consistent in their jobs.
Conceptual Framework Development of accounting policies
The conceptual framework helps preparers develop accounting policies for transactions or events that are not covered by the existing standards
Conceptual Framework Understanding the interpretation of standards
The conceptual framework helps all parties understand and interpret the standards
Conceptual Framework indentification of useful financial information
The conceptual framework clarifies that financial information must be relevant and faithfully represent the substance of financial information
Conceptual Framework identification of key components
in business strategy the conceptual framework helps identifiy key components and map out strategic relationships
How do you calculate the amortization on a bond?
It is the difference between the cash and the interest.
How to calculate the interest on a bond
You take the market rate on the bond and multiply it by the carrying value of the bond
What is the carrying value on the bond
The initial amount plus premium or less discount
When the market rate is less than the stated rate
The bond will probably be issued at a premium
Initial bond journal entry
Debt: Cash
Credit: premium and bond payable
Following year journal entries
Debit: interest exp and premium
Credit: Cash
Credit to revenue has what effect?
Increase
Debit to revenue
Decrease
Assets are increased by?
Debits
Liabilities are increased by?
Credits
