FAR 1D - Public Entities Flashcards
🕒 What are the filing deadlines for an Accelerated Filer?
✅ 10-K: Within 75 days of year-end
✅ 10-Q: Within 40 days of quarter-end
✅ Criteria: $75M-$700M public float
🕒 What are the filing deadlines for a Non-Accelerated Filer?
✅ 10-Q: Within 45 days of quarter-
end
✅ 10-K: 90 days
✅ Criteria: Less than $75M public float
📜 What are the main sections of a 10-Q?
✅ Part 1 (Financial Information):
Item 1: Financial Statements 📊
Item 2: MD&A (Management Discussion & Analysis) 🏢
Item 3: Market Risk Analysis 📈
✅ Part 2 (Other Information): Includes legal proceedings, risk factors, etc.
🧮 How does a stock repurchase affect shares outstanding?
✅ Reduces shares outstanding
✅ Conversely, shares converted from preferred stock increase shares outstanding
🔄 How do you adjust shares in an EPS calculation?
✅ Adjust for stock splits retroactively as if they happened at the beginning of the period
✅ For shares issued during the year, adjust by months left/12
📜 What are the main sections of a 10-K?
✅ Item 7: MD&A (Company performance analysis)
✅ Item 7A: Market Risk (Interest rate, FX, inflation risk)
✅ Item 8: Financial Statements
📉 How are inventory losses recorded
✅ Recorded when market value declines
✅ Can be recovered up to the amount of previously recognized losses
📊 How do you calculate Basic EPS?
✅ Net Income - Preferred Dividends
✅ Divided by Weighted Average Common Shares Outstanding
📈 How do you calculate Diluted EPS?
✅ Net Income - Preferred Dividends + Convertible Security Adjustments (Interest, Tax Shield)
✅ Divided by Weighted Average Common Shares Outstanding, adjusted for conversions
🏦 How does a stock split impact EPS calculations?
✅ Treated retroactively—adjust all shares as if the split occurred at the beginning of the period
💵 How are convertible bonds treated in Diluted EPS?
✅ Bond interest (net of tax) is added back to net income
✅ Additional shares from conversion are added to the denominator
🏦 How are preferred dividends treated in EPS calculations?
✅ Always deducted from Net Income for Basic EPS
✅ Ignored in Diluted EPS if the preferred stock is assumed converted
📊 What is important about convertible shares in Diluted EPS?
✅ Always check the conversion ratio & multiply correctly to adjust shares outstanding
✅ If conversion is assumed, no need to adjust net income unless it affects interest or dividends
🏢 How are subsidiary securities convertible into the parent company’s stock treated?
✅ Potential common shares for Diluted EPS
🔄 How do discontinued operations impact interim reporting?
✅ Reported separately, net-of-tax, on the income statement
✅ Must also be disclosed in the notes
🕒 What is the key emphasis of interim financial statements?
✅ Timeliness over faithful representation
📊 How are temporary inventory losses handled in interim reporting?
✅ Can be ignored if expected to recover by year-end
📆 How should interim period financials be viewed?
✅ As an integral part of the annual period
📜 What are examples of disclosures required in MD&A (10-K Item 7, 10-Q Item 2)?
✅ Company Overview
✅ Market Conditions
✅ Results of Operations (GAAP vs. Non-GAAP metrics like net sales, gross profit, SG&A, etc.)
✅ Liquidity & Capital Resources (Cash Flow, Loans, etc.)
✅ Critical Accounting Policies & Estimates (Only in 10-K, referenced in 10-Q)
✅ Recent Accounting Pronouncements
📈 What are examples of disclosures in Market Risk Analysis (10-K Item 7A, 10-Q Item 3)?
✅ Interest Rate Risk
✅ Foreign Currency Risk
✅ Inflation Risk
How are preferred dividends treated in Basic EPS?
✅ Cumulative Preferred: Subtract dividends due (regardless if declared) from Net Income. 🔄💰
✅ Non-cumulative Preferred: Subtract dividends only if declared during the period. 📆💸
Do preferred dividends affect diluted EPS calculations?
• Convertible Preferred Shares:
✅ Do NOT subtract preferred dividends if shares assumed converted. 🔄📈
✅ Add new common shares from assumed conversion to denominator. 📊👥
• Non-convertible Preferred Shares:
✅ Treated same as Basic EPS (subtract dividends if cumulative or declared). ❌📉
When do stock options have a dilutive effect in EPS calculations?
✅ Dilutive when average market price > exercise price 📈
(Options “in-the-money,” likely to be exercised)
✅ Not Dilutive if exercise price ≥ average market price 📉
(Options “out-of-the-money,” unlikely to be exercised)
Important:
✅ Stock options included in diluted EPS even if employees can’t immediately sell shares. 🔒📅
How is income tax expense calculated for interim (quarterly) reporting?
1️⃣ Calculate cumulative income (all quarters so far). 📅
2️⃣ Apply the estimated annual effective tax rate to cumulative income. 📊
3️⃣ Subtract tax expenses recognized in prior quarters to find the current quarter’s tax expense. 🔄
Formula:
🌟 (Cumulative income × Annual effective tax rate) – Tax expense from previous quarters = Current quarter tax expense 🌟
What are common events that trigger an 8-K filing?
1️⃣ 🔄 Change in certifying accountant/auditor
2️⃣ 📑 Entering into material agreements (e.g., mergers, major contracts, asset sales, sales of securities)
3️⃣ 💳 Entering into or defaulting on debt agreements or other financial obligations
4️⃣ 🏢 Changes in executive officers or board of directors
5️⃣ 📉 Significant impairment losses or material write-offs
6️⃣ 🚨 Major business disruptions (e.g., bankruptcies, restructuring)
7️⃣ 📅 Changes in fiscal year-end or amendments to financial statements
8️⃣ ⚖️ Material litigation or regulatory actions
✅ Form 8-K filings provide investors with timely disclosure of material events.
🕒 What are the filing deadlines for a Large Accelerated Filer?
✅ 10-Q: Within 40 days of quarter-
end
✅ 10-K: 60 days
✅ Criteria: More than $700M
Does Smaller Reporting Company (SRC) status impact SEC filing deadlines (10-K, 10-Q)?
❌ NO – SRC status only reduces required disclosures (simpler filings).
⏰ Filing deadlines are based solely on Public Float and filer categories (Large Accelerated, Accelerated, Non-Accelerated).
SRC Qualification (Disclosure Only):
✅Public float < $250M, or
✅Revenue < $100M and float < $700M
What are the main benefits of being a Smaller Reporting Company (SRC)?
✅Reduced financial disclosures (fewer historical periods required) 📑
✅Simplified MD&A requirements 📝
✅Reduced executive compensation disclosures 💼
✅Scaled-down narrative disclosures 📉
🚩 NO impact on SEC filing deadlines! ⏰
