Far 5

Question 1

Conditional Grant for NFP’s should be recorded as a ….

Answer 1

REFUNDABLE ADVANCE

Question 2

Encumbrances outstanding at year’s end in a state’s general fund may be reported as a ..

Answer 2

Fund balance assigned in the general fund

Question 3

Forward exchange contracts may be used BOTH to…

Answer 3

• Hedge Risks

- Speculate

Question 4

Formula to find COGS

Answer 4

Beginning inventory+ Purchases+ Freight in+ Transportation to consignees -ending inventory= COGS

Question 5

Gain on An INVOLUNTARY CONVERSION

Answer 5

is NOT TAXABLE… Subtract from net income when finding taxes payable

Question 6

Which one of the following would best describe the functional currency of a foreign subsidiary of a U.S. parent?

Answer 6

The currency of the primary economic environment in which the subsidiary operates and generates most of its net cash flow.

Question 7

ASC Topic 280 requires that selected data for a segment be reported separately when a segment’s operating profit (loss) is greater than or equal to 10% of the greater of the absolute combined segment profit or loss.

Answer 7

ex. Thus, you have a reportable segment if the absolute amount of that segment’s profit or loss exceeds $60,000 ($600,000 × 10%). if 600,000 is combined profit

Question 8

The times interest earned ratio is:

Answer 8

Operating income/interest expense

OR

income before interest expense and income tax/interest expense

Question 9

inventory accounting under IFRS

Answer 9

• FIFO is an allowable cost flow assumption under IFRS
• LIFO is NOT an allowable cost flow assumption under IFRS
• specific identification can only be used for certain inventory valuation under IFRS.
• biological assets are exempt from lower of cost or net realizable value accounting. Instead, they are carried at fair value less costs to sell at a point in time.

Question 10

Immediately after the consolidation, there will be no retained earnings.

Answer 10

a newly formed entity will have no retained earnings until after an operating period

Question 11

Ownership of less than 20% leads to the presumption of no substantial influence unless evidence to the contrary exists. BUT, if a shareholder holds a position as their largest single shareholder and the presence of their officers as a majority of Rea’s board of directors constitute evidence that they do have significant influence despite less than 20% ownership. SOOO if they do have significant influence then USE THE EQUITY METHOD!

Answer 11

Therefore, the equity method is used. The investment account had a beginning balance of $400,000 (purchase price). This amount is increased by Well’s equity in Rea’s earnings (10% ownership × $500,000 income = $50,000) and decreased by Well’s dividends received from Rea (10% share × $150,000 total div. = $15,000), resulting in a balance of $435,000.

Question 12

When an asset is IMPAIRED….

Answer 12

When an asset has been determined to be impaired, it is written down to fair value and loss on impairment is recognized. Restoration of previously recognized impairment losses is prohibited.

Question 13

The debt service transactions of a special assessment issue for which the government is not obligated in any manner should be reported in a….

CUSTODIAL FUND, rather than a debt service fund. The government’s duties are limited to acting as an agent for the assessed property owners and the bondholders.

Answer 13

CUSTODIAL FUND

Question 14

A forecasted Transaction

Answer 14

-can be the hedged item in a cash flow hedge

A forecasted transaction is a planned or expected transaction which has not yet been recognized, but which is subject to the risk of changes in related cash flow. As such, the cash flow (inflow or outflow) associated with forecasted transactions can be hedged.