FAR 41 Flashcards
what is the difference between concentration of credit risk and concentration of market risk
Credit risk - this sis when your customers share a common characteristic such that a event that would make it hard for one customer to pay also affects the ability of the other.
Example - when you customer operate in the same industry and there is a downturn that would hurt their ability to pay you
Market Risk
how do you classify deposits from customers to protect yourself against nonpayments for future services
- Deposits are classified as liabilities -
- This is because revenue is not recognized until earned
- deposits received before you provide goods or services are not earned
- they are reported as unearned revenue until you perform the service then they become revenue and you reclassify them from liabilities to revenue
what is the difference between factoring a receivable and discounting a receivable
Factoring - this is the sale of a SHORT TERM A/R - apply a factor fee and straight percentage factored receivables
Discounting - this is the sale of a LONG TERM A/R . A discount rate is applied by the buyer
What must you disclose regarding deferred taxes
- The Types and amounts of existing and temporary difference
- The nature and amount of each types of operating loss and tax carry forward
- The significant components of income tax expense arising from continuing operations on either the income statement or in the footnotes
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What must you disclose about the PBO in the F/S
- Must provide a reconciliation of the funded status of the plan in the notes to its financial statement s
ALSO - must disclose the accrued or prepaid pension cost reported on the balance sheet
Form 10Q must be filed within how many days of close of period for LARGE ACCELERATED
40 day
40 day
40 days
40 days
this is the quarterly report
What is rent receivable and is it a DTA or a DTL
Rent receivable is rent that has been earned, but not been collected
Its an asset on the F/S that you do not pay tax on until later - so it is a DTL
what are non monetary items
these are assets or liabilities which are not automatically convertible into a fixed or determinable amount of cash
A/D is related to equipment - therefore non monetary
what are examples of monetary items
these are items that are determinable amounts of money:
- advances of money
allowances for uncollectible accounts and un amortized premium on bonds payable
Holding gains on the current cost financial statements
On current cost financial statements -
COGS is reported at # of units sold * avg current cost during the period
any difference s are reported as holding gains or losses
Inventory is reported at replacement cost any difference are reported as holding gains or losses
Example of holding gain loss on inventory
Purchase price - $8
Replacement cost - $10
Difference is $2 = holding gain
According to current generally accepted accounting principles, justification for the method of determining periodic deferred tax expense is based on the concept of
It is the Liabilities Method
Recognition of assets and liabilities.
Current generally accepted accounting principles require the use of the liability method for calculating periodic deferred tax expense. This involves recognition and measurement of deferred tax assets and liabilities as of the balance sheet date and using the net increase or decrease from period to period to determine the deferred income tax expense amount.
When you have two Plans in a PBO -one is an asset and one is a liability - how do you present them on the B/S
You do NOT net them - they are presented at their fair value
