FAR Flashcards
allocation
accounting process of assigning or distributing an amount to a plan or formula SFAC 6 para. 142
recognition
the process of recording an item in the financial statements of an entity SFAC 6 para. 142
matching
matching of costs and revenues is simultaneous or combined recognition of the revenues and expenses that result directly and jointly from the same transactions or other events SFAC p6 para. 146
realization
the process of converting non cash resources and rights into money SFAC 6 para. 143
Financial information should include:
information about the resources of the entity, the claims against the entity, and how effectively and efficiently the entity’s management and governing board have discharged their responsibilities to use the entity’s resources
Selling Expenses include
Advertising, Freight out, Any space used for selling, Sales Salaries and commissions
Revaluation surpluses (gains) under IFRS
are shown in other comprehensive income in the year of revaluation. Each class of asset is calculated separately.
Revaluation losses under IFRS
are charged directly to the income statement under IFRS. Each class of asset is calculated separately.
The earliest period that a component of an entity can be reported in discontinued operations is when the component meets the following “held for sale” criteria:
1 Management commits to a plan to sell the component.
2 The component is available for immediate sale in its present condition.
3 An active program to locate a buyer has been initiated.
4 The sale of the component is probable and the sale is expected to be completed within one year.
5 The sale of the component is being actively marketed.
6 It is unlikely that significant change to the plan to sell will be made or that the plan will be withdrawn.
Which is a required financial statement disclosure under IFRS
1 Statement of compliance with applicable accounting principles (Not required by GAAP)
2 Disclosure of all significant accounting principles (both)
3 Disclosure of estimates made in the prep of financial statements (both)
4 Disclosure of judgements made (e.g. whether a financial asset is categorized as a “held-to-maturity” or “available for sale”) (Not required by GAAP)
What is IFRS Guidance for Going Concern?
1 Does not offer guidance of basis of accounting to use if imminent liquidation (GAAP provides guidance and disclosures)
2 It is the only fundamental assumptions (One of several for GAAP)
3 Does not require the evaluation to be performed by the Board of Directors (GAAP & IFRS Require evaluation performed by management)
4 Require relevant disclosures when there is doubt about an entity’s going concern ( Balance sheet is not required by IFRS everything else is required by GAAP)
What levels are there to measure fair value?
Best Level 1: quoted prices in active markets for identical assets or liabilities only
Good Level 2: quoted prices in active markets for similar assets
Okay Level 3: fair value measurement based on management assumptions (acceptable only when there are no level 1 or 2 inputs or when undue cost or effort is required to obtain l1 or l2)
What are cash and cash equivalents?
1 Less than 3 months investments
2 Unrestricted cash
In regards to recognizing uncollectible accounts, what is the Allowance Method?
Creates an account for uncollectible named allowance for uncollectible accounts
What happens when you factor a receivable with out recourse & with recourse?
When receiving cash, it is a sales transaction that transfers the risk to the buyer. In the case of with recourse, leaves the risk of uncollectibles with the seller
What is pledging and assigning receivables?
Pledging is the process of obtaining a loan using accounts receivables as collateral
Assigning is the process of obtaining a loan by transferring to the lender the debtor’s right to cash collected receivables
What is freight out
A selling expense not included in Cost of Goods sold or inventory
What does IFRS require to use for valuing inventory
Lower of cost or net realizable value
In regards to PP&E, What is capitalized interest?
capitalized interest equals the smaller of total interest incurred or avoidable interest. Avoidable interest is the interest on the weighted-average amount of accumulated expenditures
