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FAR > FAR 2 > Flashcards

FAR 2 Flashcards

1
Q

Installment Sales

A

Delay profit recognition until cash is received

GP is recognized in income in proportion to the cash collection

Use when there is no reasonable basis to estimate the degree of collectibility (i.e. ultimate collectibility cannot be estimated)

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2
Q

Cost Recovery

A

Appropriate when there is doubt that amount due will be collected

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3
Q

IFRS Method for L/T construction contract

A

Cost Recovery Method and Percentage of completion

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4
Q

GAAP Method for L/T construction contract

A

Complete Method and Percentage of completion

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5
Q

Non-monetary Exchange
Treatment of gain with
Commercial Substance

A

Gain/loss recognize immediately

Gain = FV asset given up > BV asset given up
Loss =FV asset given up

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6
Q

Non-monetary Exchange
Treatment of gain with
Lack commercial Substance

A
  1. No boot received = no gain is recognized
  2. Boot is paid = no gain is recognized
    [report at historical cost + cash]
  3. Boot is received = recognize proportional gain (
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7
Q

Non-monetary exchanges

IFRS - dissimilar asset

A

Similar treatment to exchange with commercial substance

Exchange that generates revenue

All gain/loss recognized

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8
Q

Non-monetary exchanges

IFRS - similar asset

A

No gains are recognized

Exchange that generate revenue

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9
Q

Other Comprehensive Income

A

Include all changes in equity from non-owner transactions

Exclude investments by owners and distribution to owners

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10
Q

Other Comprehensive Income

PUFER

A 
P - ension Cost 
U - unrealized gain/loss from avaible for sale securities 
F - foreign currency translation
E - effective portion of net cash flows
R - Revaluation gain (IFRS ONLY)
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11
Q

Presentation of OCI

A 
May be shown on 
               1. statement of comprehensive income
               2. in I/S under NI
               3. statement of equity
Must show tax effects
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12
Q

Comprehensive Income

A

Net Income + Other Comprehensive Income

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13
Q

Research and development cost

‘Expense’

A
  1. R&D performed by another company
  2. Equipment with no alternate use
  3. Testing for new products
  4. Laboratory research
  5. Depreciation expense of capitalized asset
  6. All costs related to unsuccessful defend of patent (e.g price, acquisition cost, legal cost)
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14
Q

Research and development cost

‘Capitalize’

A
  1. R&D to be reimbursed by third party
  2. Equipment, materials, facilities with alternate use
  3. All costs related to unsuccessful defend of patent (e.g price, acquisition cost, legal cost)
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15
Q

Involuntarily exchange

A

Loss = net book value + costs associated with the transaction

Gain/loss = proceed from sale - carrying amount of FA

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16
Q

Goodwill is amortize when

A

It is purchases externally

17
Q

Goodwill is expenses when

A

It is developed internally.

Maintaining and developing goodwill costs are expensed as R&D

18
Q

When there is unlimited right of return, nothing should be recorded as…

A

Sales unless the following conditions are met:

  1. sles price is substantially fixed
  2. buyer assumes all risk of loss
  3. buyer has paid some form of consideration
  4. amount of returns can be reasonably estimated
19
Q

Under GAAP, for software developed internally, cost incurred IN/BEFORE the preliminary project stage should be

A

Expensed

20
Q

Under GAAP, for software developed internally, cost incurred AFTER the preliminary project stage should be

A

Capitalized and depreciated over the economic life of the product

21
Q

Under GAAP, Start-up cost is immediately

A

Expense

22
Q

Intangible that has been permanently impaired should..

A

Record loss equal to its carrying amount

23
Q

Under U.S GAAP, Goodwill should be test for value impairment at which level?

A

Reporting unit

24
Q

Under IFRS, Goodwill should be test for value impairment at which level?

A

Cash generating unit level

25
Q

Under U.S GAAP, reversal of impairment loss is

A

PROHIBITED

26
Q

Converting NI cash to Accrual

A

Increase in A/R - Add
Increase in A/P - SUBTRACT

06929

27
Q

The treatment of research and development for an internally developed intangible asset under IFRS

A

Research is expensed

Development is capitalized

28
Q

Revaluation model for intangible asset under IFRS

A

Revaluation losses - Income Statement

Revaluation gain - OCI

29
Q

Impairment of intangible assets other than goodwill under U.S GAAP

A

Step 1: Carrying amount vs. undiscounted CF

Impaired if: carrying amount > undiscounted CF

Step 2: Recognize amount of impairment

FV - carrying amount

30
Q

Impairment of intangible assets other than goodwill under U.S IFRS

A

Compare FV to recoverable amount of intangible asset

FV - recoverable amount (the GREATER OF FV - cost to sell or PV of the intangible asset)

31
Q

Goodwill impairment under GAAP

A

Step 1: Impaired if FV

32
Q

Quality control during commercial production including routine testing is NOT

A

R&D expense

33
Q

Translation Method

‘Current rate method’

A
  1. Income Statement - weighted average rate
  2. Balance sheet
    • Asset/Liabilities - current/ year-end date
    • Common stock/APIC - historical rate
34
Q

Remeasurement Gain/Loss is reported in

A

Income Statement

35
Q

Translation gain/loss is reported in

A

Other comprehensive income

36
Q

Remeasurement Method

‘Temporary Method’

A
  1. Balance sheet
    • Monetary items - current year rate
      - Nonmentary items - historical rate
  2. Income Statement
    • non-balance sheet related - weighted average rate
    • balance sheet related - historical rate
      e. g. depreciation/PP&E, COGS, Amortization
37
Q

Calculate NCI under IFRS partial goodwill

A

FV of net assets x NCI %

FAR (12 decks)

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