FAR 24 - Personal Financial Statements

Question 1

Which Personal Financial Statements are required?

Answer 1

Required: Statement of Financial Condition (Statement of Changes in Net Worth is optional)

Question 2

How are assets and liabilities valued in a Personal Financial Statement?

Answer 2

Asset - Estimated current value

Liability - Estimated current amount

Question 3

How are estimated taxes that would be paid if all assets were converted into cash and all liabilities paid presented on a Personal Financial Statement?

Answer 3

Presented on Statement of Financial Condition between Liabilities and Net Worth

Question 4

What is the general presentation on a statement of financial condition?

Answer 4

Assets
- Liabilities
- Estimated taxes on assets (that appreciated and held)
: Net Worth

Question 5

How is life insurance presented on a Personal Financial Statement?

Answer 5

Only shown if there is cash surrender value

It is shown net of loans against the policy

Question 6

How are business interests shown on a Personal Financial Statement?

Answer 6

Business Interests that constitute a large percentage of total assets should be separated from other investments

Question 7

What are the two personal Financial Statements?

Answer 7

1. Statement of Financial Condition (B/S)

2. Statement of Changes in Net Worth (I/S & RE, OPTIONAL)

Question 8

A business interest that constitutes a large part of an individual’s total assets should be presented in a personal statement of financial condition as a?

A single amount equal to the estimated current value of the business interest.

Answer 8

Correct! Assets and liabilities are reported at their estimated current values on personal financial statements. When a business interest is included in an individual’s assets, it is presented as a single net amount equal to its estimated current value. Individual assets and liabilities of the business are not reported.

Question 9

What is a Form 10-Q? When are they due?

Answer 9

Quarterly report (Form 10Q) - only REVIEWED

Includes - Interim B/S, I/S, Cash Flow, RE

40 Days after - Accelerated & Large
45 Days after - Non-Accelerated

Question 10

What are the financial statements required for an entity applying the liquidation basis of accounting?

Answer 10

There are two financial statements:

1. ) Statement of Net Assets in Liquidation
2. ) Statement of Changes in Net Assets in Liquidation

Question 11

How are charities accounted for in personal financial statements?

Answer 11

Charities/Pledges are usually Liabilities.

NOTE: When pledges are contingent on an occurrence, the pledge won’t be recorded as a liability until the contingency has been met.