FAR Deck #2

Question 1

What are the Enhancing Qualitative Characteristics?

Answer 1

Compare and Verify in Time to Understand = Comparability, Verifiability, Timeliness, Understandability

Question 2

How are Stock Splits and Stock Dividends treated when computing EPS?

Answer 2

They are both treated as though that occurred at the beginning of the year. If prior periods are presented, they are retroactively adjusted for those periods.

Question 3

What is the 10-K filing deadline for Small, Large and Accelerated Filers?

Answer 3

60, 75, 90 days

Question 4

What is the 10-Q filing deadline for Small, Large and Accelerated Filers?

Answer 4

40 and 45 for small

Question 5

How is FIFO and LIFO different when using Perpetual vs Periodic?

Answer 5

FIFO has the same ending inventory for Perpetual and Periodic. LIFO has different ending inventories.

Question 6

What is the JE to record the consolidating eliminating JE in a business acquisition?

Answer 6

(CAR IN BIG)
DR Common Stock
DR APIC
DR RE
CR Investment in subsidiary
CR NCI
DR Adjustment to FV
DR Identifiable Intangibles assets to FV
DR Goodwill

Question 7

What is the JE to record a business combination that involves Legal Fees?

Answer 7

DR Investment in subsidiary
DR Legal Fees
CR Cash ($ for legal and/or issuance costs)
CR Common Stock
CR APIC (plug)

Question 8

Transactions in CF Financing Activity?

Answer 8

Non-Current Liabilities and Equity:
Dividends Paid (dividends declared)
Purchase or proceeds of treasury stock
Borrowing of funds
Payment of principle related to bonds/loans
Issuance of bonds, common or preferred stock

Question 9

Transactions in CF Investing Activity?

Answer 9

Non-Current (LT) Assets
Purchase/Sale of AFS or HTM securities or bonds
Proceeds from sale of equipment
Proceeds from sale of investments
Capital expenditures

Question 10

Supplemental transactions in a Cash Flow?

Answer 10

Interest Paid
Income Taxes
Non-Cash Transactions (Issuing Stock for assets, Converting bonds to stock, Issuing bonds for assets)
Conversion of debt to equity

Question 11

Example transactions in CF Operating Activity?

Answer 11

Start with Net Income (adjusted for noncash items and increase/decrease in working capital assets):
+ Depreciation Expense
- Gain on sale of equipment
- Increase in A/R
- Increase in prepaid insurance
+- AP
+ Decrease in Inventory
+ Impairment of GW
- Increase in Trading Securities
- Interest paid
-+ Taxes payable

Question 12

Stock Options outstanding are increased at which date?

Answer 12

Grant Date

Question 13

Stock Options outstanding are reduced by which date?

Answer 13

Exercise Date

Question 14

How are bond issuance costs accounted for?

Answer 14

The costs reduce the cash received from the bond issuance and are deducted from the carrying value of the liability.

Question 15

What is the absolute value of how the segment’s size test is calculated?

Answer 15

At Least 10%:
1) Combined Revenues (intersegment/unaffiliated customers)
2) Operating income
3) Assets

Question 16

What is the EPS calculation?

Answer 16

(NI - Preferred dividends)/ WASO

Question 17

What is the formula to covert Cash Basis Revenue to Accrual Basis Revenue

Answer 17

Cash basis revenue
+Ending AR
-Beginning AR
-Ending unearned revenue (Liability)
+Beginning unearned revenue (Liability)

Question 18

What is the formula to covert Cash Paid for Purchases to Accrual Basis COGS

Answer 18

Cash paid for purchases
+Ending AP
-Beginning AP
-Ending Inventory
+Beginning Inventory

Question 19

What is the formula to covert Cash Payments for Operating Expenses to Accrual Basis Operating Expenses

Answer 19

Cash paid for operating expenses
+Ending Accrued Liabilities
-Beginning Accrued Liabilities
-Ending Prepaid Expenses
+Beginning Prepaid Expenses

Question 20

What is a Form 6-K, 11-K, 20-F and 40-F?

Answer 20

6-K = filed semiannual for foreign private issuers (non-audit f/s)
11-K = annual report of a company’s employee benefit plan(s)
20-F = annual file by non-US registrants registered with SEC
40-F = annual file by Canadian companies registered with SEC

Question 21

What is a stock right?

Answer 21

A stock right provides an existing shareholder the opportunity to buy additional shares. Price is usually below the stock market price on the date the right is granted. NO JE is made, only memo.

Question 22

How to calculate the capitalized interest using weighted average costs for construction costs?

Answer 22

Total incurred costs divided by years of project x % interest = avoidable interest

Question 23

How do you treat In-Process R&D in an acquisition?

Answer 23

Recognize as an intangible asset at FV (do not write-off)

Question 24

What is included in “Supporting Activities” from NFP’s F/S?

Answer 24

1) Fundraising - maintain donor list
2) Admin Services - Soliciting membership dues
3) Membership Development - Soliciting members, ensuring satisfaction, membership brochures

Question 25

What are the 3 types of funds in governmental accounting?

Answer 25

Governmental (GRSP) = General, Revenue (special), debt Service, Projects (capital), Permanent Funds
Proprietary (SE) = Internal Service, Enterprise
Fiduciary (CIPPOE) = Custodial, Investment, Private Purpose, Pension & Other Benefits

Question 26

Property constructed on leased land is depreciated using which life - term of the lease or the life of the property?

Answer 26

Whichever is shorter

Question 27

What are the steps to reconcile Gov Funds to Gov-wide F/S for I/S?

Answer 27

CPASRIDES:
+ Capital Outlay
+ Principal payments on debt
- Asset disposal adjustment
- Sources (other financing sources-debt proceeds)
+ Revenue (measurable but unavailable)
- Interest expense (accrued)
- Depreciation expense
+ Internal service fund net revenue

Question 28

What are the steps to reconcile Gov Funds to Gov-wide F/S for B/S?

Answer 28

CANS:
+ Capital assets (existing and current)
- Accumulation depreciation
- Non-current liabilities (+Eliminate/reverse deferred inflows, - Accrued interest payable)
+ Internal service fund net position

Question 29

What are the 3 characteristics of a Derivative?

Answer 29

1) Underlying (ex. price/exchange rate)
2) No Initial Net Investment
3) Terms require or permit a net settlement
Notional Amt = base amount

Question 30

Direct Method - Cash paid to suppliers & employers calc & Cash received

Answer 30

COGS
+ Increase in Inventory
- Decrease in Inventory
- Increase in AP
+ Decrease in AP

REVENUE
- Increase in AR
+ Decrease in AR
+ Increase in Unearned
- Decrease in Unearned

Salaries & Wages
- Increase in wages payable
+ Decrease in wages payable