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FAR DECK Flashcards

1
Q

Which statements are included for NOT FOR PROFITs?

A
  1. Stmt of Financial Position (Balance Sheet, Net Assets)
  2. Stmt. of Activities (Income Stmt)
  3. Stmt. of Cashflows
  4. Functional Expenses (Only Required by Voluntary Health and Welfare)
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2
Q

What statements are included Government WIDE Stmts?

A
  1. Stmt of Net Position (balance sheet)
  2. Stmt of Activities (income sheet)
  3. Fund Stmts
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3
Q

What are the costs added to the price of Machinery?

A
  1. purchase price
  2. freight in
  3. insurance while in transit
  4. Cost of special foundations
  5. Cost of Installations
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4
Q

Encumbrances Journal Entries

A

dr. Encumbrances
cr. Rerserved for Encumbrance

EVERSE Expenditures Voucher’s Payable

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5
Q

Depletion

A

Net Cost of Resource/Units of Resource

Net Cost of Resource Cost

+ Est. Restoration Costs

  • Salvage Value
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6
Q

How are Property Dividends Valued?

A

Property Dividends are recorded at the Fair Value of the property at the date of declaration

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7
Q

Is a modification of debt eligible for FV Measurement?

A

Yes…but it is not required

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8
Q

How is compensation expense with stock options allocated?

A

Over the vesting period

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9
Q

When are loss carrybacks recognized?

A

Recognized in the year of loss. Any losses not carried back may be carried forward 20 years

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10
Q

How to Eliminate Depreciation in a Business Combo?

A

Divide Gain on the sale by the useful life

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11
Q

What are the characteristics that distinguish a Derivative?

A
  1. Terms that require or permit net settlement
  2. No initial net investment
  3. One or more underlyings and notional amts
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12
Q

How is the Discount Rate for Pensions determined under IFRS?

A

Determined by the market yield at the end of the reporting period for high quality corporate bonds having a similar term or maturity

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13
Q

GAAP Discounted Rate for Pensions

A

Settlement Rate

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14
Q

What are the rules for IFRS TRANSLATION when FUNCTIONAL CURRENCY = PRESENTATION CURRENCY?

A

IF FUNCTIONAL CURRENCY =PRESENTATIONCURRENCY

GAINS/LOSSES TO INCOME STATEMENT

HOWEVER- GAINS/LOSSES ON NON MONETARY ITEMS TO OCI

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15
Q

What does an Unrecognized Firm Commitment need to qualify as a Hedged Item

A
  1. Be binding on both parties
  2. Be specific with respect to all significant items
  3. Contain a nonperformance clause that makes performance probable.
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16
Q

Cash Collected from Customers

A

BEG AR

+ SALES

  • WRITEOFFS
  • COLLECTIONS

= END AR BALANCE

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17
Q

HTM SECURITY RECLASSED TO AFS

A

UNREALIZED GAIN OR LOSS

TO ACCUMULATED OCI IN STOCKHOLDERS EQUITY

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18
Q

HTM OR AFS SECURITY TO TRADING

A

UNREALIZED GAIN OR LOSS RECOGNIZED IMMEDIATELY IN INCOME STMT

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19
Q

TRADING TO HTM OR AFS

A

G/L ALREADY IN INCOME, DO NOT REVERSE, INCLUDE IN INCOME FOR PREVIOUS YEAR

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20
Q

What is a FIRM COMMITMENT?

A

An agreement between unrelated parties binding on both and usually legally enforceabl. Specifies all significant terms and discentive for non performance.

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21
Q

What is the Pension Expense Formula?

A

+ Service Cost

+ Interest Expense

-Expected REturn on Assets

+/- Amortization of Prior Service cost

+/- Amortization of Net Gain or Loss on PSC

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22
Q

How does IFRS allocate Compound Instruments?

A

Liability Portion = Fair Value

Equity Portion= Leftover Residual Proceeds

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23
Q

What are the required Consolidation STMT Disclosures?

A
  1. All Material Related Party Transactions
  2. Eliminated Transacations like Sales need not be disclosed
  3. Borrows and lendings between related parties must be disclosed
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24
Q

How does one eliminate COGS in Consolidated Financial Stmts?

A

GP MARGIN X INVENTORY REMAINING

or IF ALL INVENTORY IS SOLD REMOVE THE INTRAENTITY SALES FROM TOTAL COGS

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25
Q

What are the GOVT STMTS?

A

GOvt Wide Financials

a. Stmt of Net Position
b. Statement of Activities
c. Fund Stmts

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26
Q

How is land capitalized when the Land is purchased to build a plant?

A
  1. Costs of razing the old building are added to the land account
  2. Minus any salvage value from razing
  3. EXCAVATION HOWEVER…goes to the building account
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27
Q

Units of production Depreciation Method Formula

A

COST MINUS SALVAGE / TOTAL UNITS EXPECTED TO BE PRODUCED

THEN MULTIPLY THAT BY EACH UNIT TO GET DEPRECIATION EXPENSE

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28
Q

Which costs are R&D and which costs are capitalized under GAAP?

A
  1. Costs before Application Development or Feasibility are EXPENSED AS INCURRED
  2. Costs after feasibility are capitalized and amortized
  3. The Amortization on the Capitalized Costs are added to total R&D expense
  4. Training Costs are expensed as R&D
  5. Expenses to get it to sell are Inventory Costs
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29
Q

GAAP Transfer of Participating Interest

A

A transfer of a participating interest should be acccounted for as a SALE IF…. the transferor surrenders control

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30
Q

How are Direct Registration Costs and General Costs addressed after a Business Combo?

A

Direct Issuance costs are netted against proceeds as a debit to APIC. Legals Fees, Consulting are expensed against earnings

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31
Q

IMPARIMENT, WHEN IT IS DONE AND HOW IS THE LOSS CALCULATED?

A

IMPAIRMENT IS DONE WHEN THE CARRYING AMOUNT IS NOT RECOVERABLE AND THE CARRYING AMOUNT IS GREATER THAN FAIR VALUE

IMPAIRMENT LOSS= CARRYING AMT - FV

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32
Q

When are property taxes recorded as REVENUE?

A

1.Assets should be recognized when an enforceable legal claim arises or ptaxes levied 2. Resources are received whichever is earlier

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33
Q

What debt do Debt Service funds cover?

A

Debt Service funds cover General Obligation Bonds

Debt Service Funds do NOT cover Enterprise funds

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34
Q

When a contingent liability has a guarantee attached, what does it equal?

A

The Contingent Liability equals the amount of premium required by the guarantor

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35
Q

When is a gain recognized in a debt resturcturing?

A

If terms are modified and future payments are now LESS than the carrying amount of the debt

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36
Q

How are the gains and losses of a Debt Retirement recorded?

A

AS Ordinary Income from Cont. Operations and not EXTRAORDINARY

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37
Q

Under which Convertible Bond Recording MEthod is a GAIN or lOSS recorded?

A

Market Value Method records a gain or loss.

The Book Value Method does not.

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38
Q

What are Noncash financing and Investing Cashflows and how are they disclosed?

A

Noncash transactions such as: Conversion of debt to equity Exchange of long lived asset for debt Obtaining investment or building as gift

Must be disclosed at the bottom of the stmt of cash flows

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39
Q

Book Value Method for Converting Bonds to Stocks

A

No gain or loss, the APIC is the plug between the bonds book value and PV of the Common stock

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40
Q

How are bonds reported when classified as trading securities?

A

Reported at Fair Market Value Unrealized Gains and Losses in Earnings

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41
Q

Which Costs are included in bond issuance costs? and how are they recorded?

A

Includes engraving, printing, legal, underwriting, registration

Debited to a deferred charge account and amortized Straight line over the life of the bond

Amortization begins when bond is issued

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42
Q

How is Goodwill calculated?

A

Sum of the following: Consideration Transferred + FV of any non controlling interest + Acquisition date FV or previous equity interest Net Assets ( Assets minus Liabilities) using their FV on acquisition date

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43
Q

What rate is used when a foreign entity financials are translated from functional to reporting currency?

A

Assets and Liabilities Current Rates

Expenses and Revenues Weighted Avg Current Rates

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44
Q

HOW IS THE PV OF A BOND CALCULATED?

A

PV OF $1 @ YIELD RATE X BOND FACE

PLUS PV OF ORDINARY ANNUITY OF 1 @ YIELD

X STATED RATE X FACE

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45
Q

When is a provision for warrant costs made? and When are they recognized?

A

When the related revenue is recgonized

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46
Q

How is an impairment test of a IFRS CGU done?

A

Impairment exists If Carrying Amt of CGU (cash generating unit) exceeds Recoverable amount

Total Amt of Carrying Value w/ Goodwill

MINUS Recoverable Amount

= impairment loss

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47
Q

How are gains and losses from REMEASUREMENT AND TRANSLATION reported?

A

Remeasurement G/L..Earnings

Translation…OCI

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48
Q

How is the Operating Cycle Determined?

A

Days Sales in Receivable + Days Sales In Inventory

ON BALANCE SHEET,

1 YEAR OR OPERATING CYCLE,

WHICHEVER IS LONGER

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49
Q

How is a Servicing Asset Amortized?

A

Servicing Assets are amortized in proportion to and over the period of Net Servicing Income

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50
Q

How are Debt Retirement G/Ls calculated?

A

Cash Paid to Retire

MINUS Debt Carrying Amount (Book value)

= DEBT RETIREMENT G/L

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51
Q

HOW DOES IFRS TREAT INVESTMENT PROPERTY?

A

VALUED AT COST OR FAIR VALUE METHOD

PROFIT OR LOSS TO EARNINGS

PPE GAINS TO TOCI

PPE LOSSES TO EARNINGS

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52
Q

How is a noncash asset exchanged to settle a debt?

A

Must be revalued at FV

A Gain or loss is recognized in earnings

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53
Q

How does IFRS treat Losses?

A

No extraordinary losses

Does not distinguish losses from expenses BUT THEY ARE DISPLAYED SEPARATELY

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54
Q

How is a General Fund purchase of a Fixed Asset recorded?

A

DR. Expenditures Control

CR. Accounts Payable

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55
Q

If the stated rate on a Capital Lease is unreasonable as compared to the incremental rate, what the PV of the lease liability?

A

Use Cash Fair Value price for the asset when stated rate is unreasonable

Normally PV of Minimum Lease PMTS is the lower of the PV of minimum lease pmts or Fair Value price

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56
Q

How are Stock Option Compensation Expense allocated?

A

When the shares are intended to compensate the employeees over 2 years…the compensation expense is allocated over 2 years

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57
Q

How are Donations reported?

A

Other operating Revenue

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58
Q

If warrants are NOT detached, how is Equity Allocated?

A

No allocation is made to Equity

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59
Q

How are start up costs treated?

A

Expensed as incurred

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60
Q

Where are actual program expenditures reported?

A

Reported under NET ASSETS RELEASED FROM RESTRICTIONS

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61
Q

wHAT IS NET REALIZABLE VALUE?

A

Accounts Receivable

MINUS Balance in Allowance for Doubtful Accounts

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62
Q

How are unconditional promises to give (pledges) reported?

A

Reported at NRV,

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63
Q

If an NFP has a acct policy to impose a time restriction, what kind of Assets are they?

A

Temporarily Retsricted

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64
Q

When are COnditional Pledges recognized?

A

Not recognized until conditions are substanitally met or the possibility that the conditions will not be met are remote

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65
Q

In what Stmt are NFP Securities changes in fair values reported?

A

Stmt of Activities, total change in the fair value of the securities from date of recipt to the Balance Sheet date

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66
Q

When do gains and investment income from Restricted Perm Endowments become Temporary?

A

If time restriction expires or the expenses can be met

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67
Q

How are Gross Health Care Services Revenue reported?

A

Exludes Charity Care Reported at NRV

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68
Q

WHo requires Stmt of CFunctional Expenses?

A

Voluntary Health and Welfare Orgs

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69
Q

What are the typical Disclosures for Pensions?

A

Components of Period Pension Costs

Amt of Unrecognized Prior Service Cost

A detailed description of plan including employee groups covered

DOES NOT REQUIRE DIFFERENCES BETWEEN EXECS AND REG EMPLOYEES

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70
Q

What is Costs of Goods AFS?

A

BEG INVENTORY

+ PURCHASES

=COGSAFS

COGS

+ ENDING INV

= COGSAFS

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71
Q

How does a Lessee record a Capital Lease?

A

Dr. Asset

Cr. Liability

(Lower of fair Value or PV of min lease pmts exclusive of EXEC costs

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72
Q

What are the Enterprise Wide Disclosures?

A
  1. Geographic Areas
  2. Major Customers 10% of Total REvenue
  3. Products and Services
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73
Q

How are Financial Assets subject to Prepayments measured?

A

Measured like Debt Securities as AFS or Trading

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74
Q

What is the difference between Put and Call Options

A

Put Options- Provides the holder the right to sell the underlying at an exercise or strike price anytime during the option form

Call Options- Provides the holder the right to buy the underlying at an exercise or strike price anytime during the option form

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75
Q

How is Amortization of Bond Premium or Discount dealt with in the Indirect Method for Cash Flow from Ops?

A

Amortization of a Bond Discount added back to Net Income for the Indirect Method Amortization

Bond Premium Amortization is subtracted from Net Income for the Indirect Method

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76
Q

Would a loss on the sale of machinery be added or subtracted to Net Income using the Indirect Method?

A

A loss on the sale of machinery would be an addition to NEt Income when using the indirect method because it is a NON CASH flow Gains would be subtracted

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77
Q

How do NFPS treat Revenues and Expenses?

A

Revenues are increases of Net Unrestricted Assets

Expenses are decrease of Net Unrestricted Assets

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78
Q

How are Deficits Accumlated during the development stage of a company reported?

A

Not capitalized

Reported as a part of Stockholders Equity

Start Up Costs expensed as incurred

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79
Q

When is dividend revenue recognized?

A

For the Fair Value Method,

Dividend revenue is recognized for the same year and period as the Date of Record.

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80
Q

Are liquidating dividends revenue or a return of capital?

A

Liquidating dividends are a return of capital therefore they are not included in Dividend Revenue.

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81
Q

How is a Capital Lease with a Bargain Purchase Option reported?

A

The Capitalized Lease Cost is =

Present Value of Minimum Lease Payments

PLUS Present Value of Bargain Purchase Option

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82
Q

What are the conditions for a Private Companies ignoring VIE Accting?

A
  1. Private Company Lessee and Lessor are under common control.
  2. Lessee has a lease arrangement with the lessor
  3. Guarantees/Collateral provided by the lessee for the lessor are less in value than the asset leased by the lessee.
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83
Q

How are Investments reported by NFPs?

A
  1. Bonds/Stocks all at Fair Value
  2. Purchased investments recorded at Historical Cost
  3. Contributions of investments received at Fair Value
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84
Q

When the functional currency of the Foreign Subsidiary is the local currency, how is it translated back to the Reporting Currency?

A

Assets/Liabilities>>>>>Current Rate at Balance Sheet Date Revenues and Expenses>>>>>Weight Avg, Rate

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85
Q

How are investments designated by the Board of the NFP classified?

A

Reported as Unrestricted Assets regardless of the restrictions set by the board

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86
Q

What are the revenues of a Health Care Entity?

A

Patient Services, Premium Revenue Other Revenue: Services other than health care like tuition and cafeteria profits

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87
Q

How are Correction of Errors presented?

A

They are Prior Period Adjustments shown NET OF TAX as a cumulative adjustment to the BEG balance of RE at the earliest period of change.

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88
Q

What happens when a Pension Plan is Amended?

A

When a pension plan is amended and it is determined that Prior Service Costs are going to add more to the Projected Benefit Obligation…this cost is amortized over the remaining average service years It is included in Pension Expense

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89
Q

How are Gains on Involuntary Conversions recognized?

A

When Condemnation Awards, forced sales by Eminent Domain occur, the gains or losses are recognized in the year they occur on the books. For tax purposes a deferred tax liability or asset is created.

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90
Q

Which rates are disclosed for Pension Plans?

A

Rate of Comp increase

Expected Rate of Return on Plan Assets

Discount Rate for PBO

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91
Q

Where is the gains and losses of a Fair Value Hedge reported?

A

Income Statement

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92
Q

Where are the gains of a Cashflow Hedge and Foreign Currency hedge reported?

A

OCI

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93
Q

IS Cashflow/Share permitted?

A

NEVER!

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94
Q

How do Convertible Debt Interest Rates compare with Nonconvertible debt?

A

Convertible Debt Interest Rates are generally LOWER than Non Convertible Debt

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95
Q

When a market price unexpectedly increases and a PERMANENT LOSS has already been recognized, what kind of Gain is Recognized?

A

The Subsequent Gain is equal to the amount of the Price Recovery in the previous quarter, never above original cost even if the Market Price has exceed it

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96
Q

How is Operating Lease Income Recognized?

A

Rental Net Income MINUS Depreciation MINUS Maintenance Costs

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97
Q

When a firm elects NOT to bifurcate a Hybrid Instrument, how should changes in FV be recognized?

A

Changes in FV are reflected prospectively in the current year

Cumulative Effect adjustments are NEVER reflected in earnings

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98
Q

What are the disclosures for Sinking Funds?

A
  1. Future Pmts for Sinking Fund Requirements
  2. Maturity Amts of Long Term debt during each of the Next 5 years, detailing each year
  3. A Combined Aggregrate Amount of Both Pmts and Maturities
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99
Q

How are legal costs associated with Obtaining a Patent on a new Product?

A

Capitalized and Amortized

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100
Q

What rate is used to discount Stock Option Compensation?

A

The RISK FREE INTEREST RATE is used to discount the exercise price of option and future dividend stream

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101
Q

Are Deferred Taxes under IFRS CURRENT or NONCURRENT?

A

Can only be NON CURRENT.

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102
Q

When is the last PMT of a Future Amount of Annuity in Advance made?

A

Last PMT is made with another year to go

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103
Q

What is the effect on Retained Earnings and Working Capital when a Dividend is Declared?

A

When a dividend is declared, RE is DECREASED and a CURRENT LIABILITY is credited for the Dividend Payable…. therefore this reduces Working Capital because LIABILITIES are increased and Current Assets are not.

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104
Q

When can two or more operating segments be aggregated into a single operation?

A

If ALL of required aggregation criteria is met…10% test can be avoided

or After 10% test is met

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105
Q

What is the most relevant amount for transactions involving FINANCIAL INSTRUMENTS?

A

FAIR VALUE.

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106
Q

How do NFPS regonize Depreciation Expense?

A

As a DECREASE in UNRESTRICTED ASSETS

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107
Q

How are unconditional pledges that are expected to be received within a year presented?

A

Reported at NRV (Net of Uncollectible Accounts)

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108
Q

How are Pledges Receivable at more than one year?

A

Reported at Present Value

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109
Q

What is the difference between Assignment and Factoring?

A

In assignment the OWNER of receivables obtains a loan from the lender by pledging the AR as collateral

Factoring is a SALE of receivables

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110
Q

How is the change in FV of Servicing Assets reported?

A

Reported in Earnings for the Current Period

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111
Q

How does one use PV to calculate a Future Value of an Investment?

A

10,000 invested, how much will it be worth in 2years at 10%?

10,000 / PV of 1 Annuity over 2 years

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112
Q

What is the Net Cash Receipts of a Bond Issuance?

A
  1. Bond Face x Percentage for DISC or PREM ex. 97 or 103

plus ANY ACCRUED INTEREST

minus BOND ISSUANCE COSTS

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113
Q

BONUS FORMULA

A

B= % (NI - B)

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114
Q

What is the Simplified Hedge Acct Approach for Private Companies?

A
  1. Expedient Apporach, measurement @ settlement value than Fair Value
  2. Longer time to qualify for hedge accounting
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115
Q

What are the Enterprise Segment Disclosures?

A
  1. Revenues From External Customers
  2. Intersegment Revenues
  3. Interst Rev and Expense
  4. Unusual & Extroadinary Gains/Losses
  5. Equity in the Net Income of Investees
  6. Income Tax or Benefit
  7. Significant Non Cash Items

Basis in Measure, Reconicliations, If Revied by COP

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116
Q

How are ACCT changes that result in the change of a business entity?

A

Reported by restating the financial statements of all prior periods presented

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117
Q

Which Inventory Costing Approach ends in the Higher Inventory and Lower COGS?

A

The perpetual system ends in a higher inventory for LIFO and Lower COGS because the cost of the of the items is an average of the arlier lower costs in the year.

Under FIFO, Period and Perpetual are the same

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118
Q

Cash Collected from Customers

A

Sales - [END AR - BEG AR]

= Cash Collected from Customers

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119
Q

Accounts Receivable T ACCOUNT Formula

A

BEG AR

PLUS Sales

MINUS Cash Collections

MINUS Writeoffs

= END AR

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120
Q

What is the Net Cost of Resource for Depletion?

A

Cost of the Land

+ Restoration Costs

  • Salvage Value

= Net Resource Cost

Then divide NRC / Recoverable Units

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121
Q

What is a Major Disadavantage of Periodic Inventory Costing?

A

Inventory Shortages are buried in COGS

122
Q

How are Special Assessment Debt for Capital Project Funds accounted for?

A

If a Capital PJ Fund has a special assessment that the GOVT is on the hook for….

Treated as any other capital improvement or financing cashflow

Treated as General Obligation debt in GOVT statements only

123
Q

Which Company Reports Dividends in the Consolidated Stmts?

A

Only dividends of the parent company are reporte din the Consolidated Stmts

Subsidiary declared and paid dividends are eliminated in the consolidated worksheet

124
Q

How is Composite and Group Depreciation Caculated?

A

Sum of ANNUAL SL Depreciation

_______________________

total Original Cost

125
Q

How is Unearned Revenue adjusted?

A

Unearned Revenue is a liability.

As prepaid revenue that hasnt been earned yet comes in, the liability is credited.

As Revenue is earned the Unearned Revenue is debited.

126
Q

How are Initial Direct Costs reported for Financing and SalesType Leases?

A

For Sales Type Leases, they are expensed currently.

For a Finance Lease they are capitalized and amortized over the life of the lease

127
Q

Which funds practice Budgetary Accounting?

A

Only the General and Special Revenue Funds

128
Q

How should FV in excess over the Carrying Amount be reported for the Equity Method?

A

Any portion of the excess FV over Book Value that relates to DEPRECIABLE assets like PPE & Inventory should be AMORTIZED.

This subsequently decreases the Investment Account.

129
Q

What are the required NFP Financial Stmts?

A
  1. Stmt of Financial Position
  2. Stmt. of Activities
  3. Stmt of Cashflows
  4. Stmt of Functional Expenses (VOLUNTARY HEALTH ONLY)
130
Q

What are the funds required for Proprietary Funds?

A
  1. Stmt of Net Position
  2. Stmt of Revenues, Expenses, and Changes in Net Position
  3. Stmt of Cash Flows
  4. DOES NOT APPLY TO INTERNAL SERVICE FUNDS
131
Q

What are the required Stmts for Fiduciary Funds?

A
  1. Stmt of fiduciary net positions
  2. stmt of changes in fiduciary net position
  3. Never included in Govt Wide
132
Q

What is the Evolution of the FASB?

A
  1. AICPA appoints the Committe on Acct Procedure (CAP)
  2. AICPA Appoints Acct. Principles Board (APB)
  3. AICPA appoints the Wheat Committee
  4. Which then reccomends the FASB
133
Q

Detail the process for Issuing a New FASB Statment?

A
  1. A new project is added to the agenda
  2. Research is conducted and Discussion Memorandem is Issued
  3. Holds A Public Hearing
  4. Evaluates Researc, Issues Exposure Draft
  5. Modifies Exposure Draft if necessary
  6. Holds a Public of Vote, 4/7 to pass
  7. Issues ASU (Acct Standard Update)
134
Q

What is the Conceptual Framework?

A

Underlying Principles or Constitution for the creation of GAAP

135
Q

What is Highest and Best Use Fair Value?

A
  1. What is physically possible
  2. What is financially possible?
  3. What is legally possible

NOT how the reporting entity uses it

136
Q

What is the liquidation assumption?

A

Will use Net Realizable Value

137
Q

Fair Value is measured as…..

A

Price received when selling an asset or paid when transferring a liability.

It is an exit price

138
Q

Is Fair Value permitted for Consolidated Investments in Subsidiaries?

A

NO

139
Q

What are the three Valuation Techniques for Fair Value?

A
  1. Market Approach
  2. Cost Approach - Replacement Cost
  3. Income Approach- discounting future cashflows
140
Q

What is the level 1 hierarchy for FV?

A

Level 1. Unadjusted quoted prices in ACTIVE markets for items IDENTICAL to those being valued at that date

141
Q

What is level 2 in the FV Hierachy?

A

Level. 2….Observable inputs other than Level 1.

  1. Similiar quoted prices
  2. Similiar or identical BUT in NON active markets
  3. interest rates, yield curves
  4. derived principal market correlation
142
Q

What is the Level 3 FV Hierarchy?

A

Level 3. UNobservable inputs

  1. Inputs that incorporate the entity’s assumptions like internally generated mgmt accounting reports
143
Q

What are the Fair Value Required Disclosures?

A
  1. Level of Hierarchy
  2. Valuation Techniques used
  3. Any Changes from prior periods in valuation techniques
144
Q

What are Foreign Private Issuers?

A

Any foreign issuer other then a foreign govt except:

  • More than 50% voting securities are US owned
  • business admin in the US
  • majority of officers are US citizens

Rule 205 Sec Act of 1933

145
Q

What are the Required Stmts for a 10-k Filing?

A
  1. Balance sheet for quarter end and fiscal year end
  2. Income Statements for the current quarter and same period for the prior year
  3. Cumulative YTD cash flow stmts for current and fiscal year
146
Q

What are Unusual AND Infrequent items?

A

Extraordinary Items, reported Net of Tax after Discont. Ops

if unusual or infrequent, reported in Income from Cont. Operations (NOT NET OF TAX)

147
Q

What is Cost of Goods Manufactured?

A

COGM

+ FIN GOODS BEG INV

  • FIN GOOD END INV

= COGS

148
Q

Within how many days must a Form 10-q be filed?

A

Large Accelerated Filers- 40 days

Non-accelerated filer 45 days

149
Q

Within how many days must a Form 10-k be filed?

A

70 days for

75 days for

150
Q

What does Regulation S-X regulate?

A

The form and content of financial statements to be filed with the SEC.

151
Q

What are Derived Tax Revenues?

A

A GOVT Non exchange based on a transaction or work done, like income taxes or sales taxes

152
Q

What are imposed non exchange revenues?

A

Result from Assessments just because something exists…like property taxes or fines

153
Q

What are Govt Mandated NON exchanges?

A

Grant money specified for a speical purpose

154
Q

Where are Non Reciprocal Inter- Period Govt Transfers reported?

A

In the General Govt Fund, a transfer that is non reciprocal is a OTHER FINANCING USE OR SOURCE

In a Proprietary Fund, a transfer is an item below non operating revenues and expenses

155
Q

Where are General Capital Assets reported?

A

Reported at Cost if purchased, FV if Donated

In govt activities column in Govt Wide Stmts

156
Q

How is the Net Position Format Calculated for Govt Wide and Entity STmts?

A

assets + deferred outflows = liabilites + def. inflows

= net position

157
Q

How is Intrinsic Value Calculated?

A

100 Shares

Market pRice $10

Exercise Price 9

100 shares [10 mp - 9 ep]= 100 x 1= intrinsic value

Time Value = Premium - Instrinsic Value

158
Q

When is Specific Identification Acct for Inventory Required under IFRS?

A

Required for Inventory that is not interchangeable

or

for Inventory segregated for specific products

159
Q

Where are Unrealized Gains from Restricted Asset Investments reported for NFPS?

A

Stmt of Changes of Net assets

160
Q

Where are Unrealized/Realized Gains reported for NFP Hospitals reported?

A

Unrestricted Unrealized G/Ls…Stmt of Operations

Unrestricted Realized G/Ls…. Stmt of Cashflows

161
Q

Where do Investment Returns on Permanent Restrict Assets get reported?

A

Stmt of Changes in Net Assets

162
Q

What are the 2 main criteria to Qualify for a Hedging Instrument?

A
  1. Sufficient Documentation
  2. Hedge MUST be highly EFFECTIVE throughout its life
163
Q

What are the 3 acceptable methods for IFRS Accounting for T-Stock?

A
  1. Par Value Method
  2. Cost Method
  3. Constructive Retirement Method
164
Q

What methods does IFRS use to determine Impairment?

A

Carrying Value > Recoverable Amount

Recoverable Amt is the Greater of

Fair Value Less Costs od Disposal

or

Value In Use:

165
Q

How does IFRS define Value in use?

A

Estimating future cash flows from Continued use and eventual disposal.

166
Q

What are the required Stmts of Personal Financial Stmts?

A
  1. Statement of Financial Position
  2. Statement of Changes in Net Worth
167
Q

When using the Cost Adjust for FV Method, which dividends are recognized as Income for the Investor?

A

Liquidating Dividends are not considered Income to the Investor, therefore the portion that is not in excess of the investors shares of the investee’s earnings ARE INCLUDED in Net Income.

168
Q

If the aggregate market value of the bonds and the warrants exceeds the proceeds of the Warrants, is the portion of proceeds allocated to the warrants less than their Market Value?

A

Yes. The FMV is greater than the proceeds, therefore relative Market Values assigned to the proceeds will be less than their actual FMV.

The amount allocated to warrants is recorded

as paid in capital- stock warrants

169
Q

What are the 2 variations of the Dollar-Value LIFO Method?

A

Double extension method

Link Chain Method

170
Q

A bond discount is….

A

Extra interest expense…therefore it lowers Net Income

171
Q

Straight Line Amoritzation is HIGHER OR LOWER than Amortization under the Effective Interest Method?

A

Straight Line Amort is higher than Amortization during early years THEREFORE on a bond with a discount, Bond Carrying Amount is Overstated and Retained Earnings is Understated (Because A discount is extra interest expense)

172
Q

When are stock options rights recognized by the Issuer?

A

Upon Exercise of the options…

ISSUANCE - Memorandum entry

Company issues Rights to $15/share at par value 10/share

Cash (Proceeds)

Common Stock (10/share)

APIC (15-10PV plug)

173
Q

When a company recognizes Bad Debt Expense, what accounts are affected?

A

Current Assets are decreased

Bad Debt Expense xx

Allowance for Bad Debts xx

*Allowance for Bad Debts is a Contra AR account, therefore Crediting it, would be reducing AR, a current asset

174
Q

What part of the Income Stmt are Lease Termination Costs recognized?

A

If not part of the discontinuation of a Segment, Lease Cancellation Costs are reported as part of Income From Cont. Ops.

175
Q

What is the inherent difficulty in the determination of results of Operations on an interim Basis?

A

The most serious problem specified is dealing with costs that are expensed in one interim period but may provide benefits to other interim periods. Per ASC Topic 270, such expenses may be allocated to the interim periods benefited.

176
Q

Which column are Internal Service Funds usually recorded in the GOVT Wide STMT of Net Assets?

A

A proprietary fund, however….it is reported in Governmental Activities

177
Q

How does one determine Cash Paid for Expenses during a Period? (Accrual to Cash)

A

ENDING PREPAID EXPENSES

+ CURRENT ACCRUAL EXPENSE

(BEGINNING PREPAID EXPENSE)

= EXPENSES PAID WITH CASH

Then reduce this amount if the Payable Account Increase.

Or add to this amount if the Payable Account Decreased.

178
Q

Cash Paid to Suppliers

A

BEG ACCOUNTS PAYABLE

+ ACCRUAL PURCHASES

  • (ENDING ACCOUNTS PAYABLE)

= CASH PAID TO SUPPLIERS

179
Q

CASH PAID FOR INTEREST

A

BEG INTEREST PAYABLE

+ ACCRUAL INTEREST EXPENSE

  • (ENDING INTEREST PAYABLE)

= INTEREST PAID DURING THE PERIOD

180
Q

How are continuing franchise fees (periodic pmts based on revenues) reported?

A

Expensed as incurred.

Payments for the Franchise and Legal Fees are amortized since they have future benefits.

181
Q

What are the Five Items to be used as a guide to determine if there should be different Guidance between Public and Private Companies?

A

(a) Recognition and measurement—considerations include current guidance relevance, more practical expedients, needs of users, access to management, industry-specific guidance, and cost effectiveness;
(b) Disclosures—considerations include current guidance relevance , management access, cost effectiveness, and the need for additional disclosures;
(c) Display—considerations include current guidance relevance;
(d) Effective date—generally, the effective date is one year after the first annual reporting date for which public companies are required to adopt standards ; and
(e) Transition method—considerations include the retrospective method, the modified retrospective method, practical expedients; and cost effectiveness.

182
Q

ASC Topic 255 requires that the current Cost for Inventories be measured as the….

A

The Lower of Current Cost or Recoverable Amt at Meas. Date (market)

Same as Lower Cost or Market

183
Q

Which Foreign Currency Transacations are Reported in Other Comprehensive Income

A

All Foreign Currency Hedges and Translation Adjustments

184
Q

What is the difference betwween how IFRS and GAAP treat a Going Concern?

A

IFRS assumes the Company in question is a GOING CONCERN.

GAAP However, forces an auditor to make that determination, if it is indeed a Going Concern

185
Q

Does IFRS or GAAP require Comparative Financial Stmts?

A

IFRS requires Financial Stmts

186
Q

Which Statements are required in IFRS but not in GAAP?

A
  1. Statement Of Comprehensive Income
  2. Statement of Changes in Equity
187
Q

How does IFRS present Revenue and Net Income?

A

IFRS presents Income instead of Revenue.

Gains are NOT separately displayed.

Losses are expenses but ARE displayed separately

Uses PROFIT instead of Net Income

188
Q

What is the date of transition for IFRS Transition?

A

If IFRS was implemented in June 2010 for its Dec 2010 STMTS, the Date of Transition is actually Jaunary 1, 2009

This is because a full year of comparative stmts is required from the previous year

189
Q

What is the major difference between an exchange transaction and a nonexchange transaction for governmental units?

A

In an exchange transaction goods or services of equal or near equal value exchanged. In a nonexchange transaction one party provides value for no direct benefit

190
Q
A
191
Q

What is the full set of Stmts Required by IFRS?

A
  1. Stmt of Financial Position
  2. Stmt of Comprehensive Income*
  3. Stmt of Changes in Equity*
  4. Stmt of Cash Flows
  5. Notes to the FStmts
  6. Comparative Stmts as well

****Not required by GAAP

192
Q

Under the Equity Method, what does the Consolidated Retained Earnings amount?

A

The Parent’s Retained Earnings ONLY

because it contains the both the parent and the parent’s share of the subsiidiary’s net income

193
Q
A
194
Q

What are the rules for IFRS TRANSLATION when FUNCTIONAL CURRENCY = FOREIGN CURRENCY?

A

Translations gains and losses are recorded in OCI

Assets and Liabilities are recorded at the closing exchange rate

Income and Expenses are recorded at the rate when the transaction occurred.

195
Q

When does a bargain purchase occur?

A

When the fair value of net identifiable assets exceeds consideration paid.

196
Q

Where are the Gains and Losses of a Fair Value Hedge recognized?

A

In Earnings.

Cash Flow and Foreign Currewcy hedges to OCI

197
Q

Are excavation costs for construction LAND Or Building Costs?

A

BUILDING!

198
Q

What are the risks inherent in an interest rate swap agreement?

A

I.The risk of exchanging a lower interest rate for a higher interest rate.

II.The risk of nonperformance by the counterparty to the agreement.

199
Q

What happens when Ending Inventory is Under or Overstated?

A

If ending inventory is understated, cost of goods sold is overstated, and net income is, therefore, understated. The opposite is true for beginning inventory. Since ending inventory of one period is the beginning inventory of the next period, errors in inventory determination affect income for only two consecutive periods. Thus, the error in Year 1 will be offset in Year 2, and the error in Year 2 will be offset in Year 3. Since ending inventory is correct in Year 3, retained earnings for Year 3 will be correct even though Year 3 net income was overstated. This is summarized in the following table:

200
Q

How is Gross Lease Receivable calculated?

A

Gross investment= min lease pmts x # of years

plus any unhauranteed residual value

201
Q

How is RE adjusted for a Stock Dividend that is less than a 20-25% increase in shares outstanding?

A

Stock Dividends less than 20-25% increase in Common Outstanding

  • Charge RE for FAIR VALUE of stock dividend
202
Q

How is RE adjusted for a stock dividend that increases shares outstanding by MORE THAN 25%?

A

Charge RE for PAR VALUE of stock dividend

203
Q

Interest Payable is always…

A

AT FACE

204
Q

Interest Receivable is always at….

A

Effective Rate

205
Q

When using the Completed Contract or % Completion Method, how are long term, expected losses reported?

A

Recognized Immediately

206
Q

When is a Gain Recognized in a NonMonetary Exchange that LACKS commercial substance?

A

The party that RECEIVES cash recognizes a gain in proportion of cash paid to the total consideration

207
Q

When are dividends eliminated in Consolidation Accounting?

A

All Intercompany Dividends are eliminated.

Subsidiary dividends to outside parties are also eliminated.

208
Q

When may Assets and Liabilities be Netted under IFRS when multiple pensions in play?

A

Assets and Liabilities may be netted when there is a legally enforceable right to use the assets of one plan to settle the obligations of another plan.

209
Q

Which Derivatives require Bifurcation?

A

Separates the host from an embedded contract

Bond payable with an Interest Rate based on the S&P Index

Equity Instrument with a call option

210
Q

What is a Voucher’s Payable in Government Accounting?

A

When an expenditure is recorded for goods received, Voucher’s Payable are Goods Received But not paid for yet.

211
Q

When must the Employer’s Obligation for Post Retirement Benefits be fully accrued?

A

Must be fully accrued by the date the employees are fully eligible for benefits

212
Q

What kind of tax difference is a Percentage Depletion that takes depletion in excess of cost?

A

Permanent Difference

213
Q

When can a company avoid Consolidation of a subsidiary under IFRS?

A
  1. Partners do not object
  2. No Publicly Traded Securities
  3. Parent prepares consolidated STMTS in compliance
214
Q

The STMT of Changes in Net Assets applies to which type of organizations?

A

Reports changes in NFP Hospital’s restricted and unrestricted assets

215
Q

When are Non-Cumulative and Cumulative Dividends, added or subtracted net income (loss)?

A

Non Cumulative Dividends, are only added to Net loss or subtracted from net income when Declared

Cumulative Dividends in the current year are included even if NOT DECLARED

216
Q

What is Deferred Income Tax Expense?

A

The sum of the net change in deferred tax assets and liabilities

217
Q

Is there a value assigned to the conversion feature of a convertible bond?

A

NO

218
Q

When are Contigent Liabilities Disclosed and Accrued?

A

Only Contingent Losses that are PROBABLE and reasonably estimable are ACCRUED and DISCLOSED.

Contingent losses that are Reasonably Possible…are only disclosed.

CONTIGENCY GAINS ARE NOT ACCRUED, BUT MAY BE DISCLOSED.

219
Q
A
220
Q

When can losses on fixed assets be recovered?

A

Losses on fixed assets to be disposed of can be recovered due to changes in the fair value or selling costs associated with the asset.

This write-up, however, cannot exceed the carrying amount prior to recognition of impairment. If the NRV for this asset increases in the next period, the maximum recovery (gain) that could be recognized is $675

221
Q

Impairment exists when….

A

Carrying Value exceeds the sum of the expected value of the undiscounted cash flows.

222
Q

How should operating expenses for a NON GOVT NFP Org be reported??

A

As decreases in unrestricted net assets.

223
Q

How are Unrealized Gains and Losses Reported on Held To Maturity Securities?

A

If NOT using the Fair Value Method, NO unrealized g/l’s are realized because they are continued to be held at cost.

224
Q

What items does the Summary of Significant Accounting Policies disclose?

A

Specifically, disclosure pertinent to

a. Selection from existing alternatives
b. Principles peculiar to a particular industry
c. Unusual or innovative applications
3. Examples
a. Consolidation method
b. Depreciation method
c. Amortization of intangibles
d. Inventory pricing
e. R&D references amended by SFAS 2
f. Translation of foreign currencies
g. Long-term contract accounting
h. Franchising and leasing activities
4. Accounting policy disclosure should not duplicate disclosures elsewhere in the statements.

225
Q

What methods can be used to measure Financial Liabilities under IFRS?

A

Amortized Cost

and

Fair Value through PROFIT OR LOSS***

***GAAP is Fair Value

226
Q

In a sales lease back transaction, when is a gain resulting from the Sale deferred?

A

When the seller-lessee RETAINS the right to substantially all of the remaining use of the property.

The gain is deferred.

227
Q

When the gain on a Sales Leaseback Transacation recognized immediately?

A

The seller-lessee has transferred substantially all the risks of ownership, any gain or loss on sale is recognized immediately.

228
Q

Contribution received in year 1, but was restricted for use until year 2

A

Contributions are accounted for on the accrual basis. Therefore, the contribution would be recorded in year 1.

If the time restriction was significantly into the future, the contribution would be recorded at its present value.

229
Q

How does IFRS value Intangible Assets?

A

Cost or Revaluation Model

” Increases in value from the adjustment
are reported in the current period as
Other Comprehensive Income” Decreases in value from the adjustment
are treated as an expense

No guidance to how often should be revalued

Same treatment for PPE

230
Q

What is the test for recoverability of operational assets PER asc Topic 360?

A

Undiscounted cash inflows

LESS related outflows resulting from disposal

Compared to Carrying Value

231
Q

How are dividends received in excess of the Investor’s share of investee’s earnings since asquisition recorded?

A

As a reduction in the investment account.

If Company A’s share of the dividends is 10,500, but share of earnings since acq

232
Q

How is Income defined under IFRS?

A

Income is increases in economic benefits during the accounting period in the form of inflows or hancements of assets or decreases of liability tha tresult in increases in equity, other than those relating to contributions from equity participants

Expenses, the opposite, decreases

233
Q

When rent is received in advance b the lessor for an operating lease, when is Revenue recognized?

A

In the period specified by the lease.
Rent is revenue is recognized in each accounting period on a straight line basis

234
Q

What are the 5 elements of the IASB framework?

A

IASB has 5 elements,

  1. asset,
  2. liability,
  3. equity,
  4. income,
  5. expense

Gains are Income and Losses Are Expense

235
Q

When is Revenue recognized under the IASB framework?

A

When it meets the definition of an element and can be measure reliably.

236
Q

When can a Warranty Obligation be Recorded at Fair Value?

A

IF the warranty can be settled by contracting with a third party

237
Q

Cash contributions that are DONOR Restricted for long term purposes are reported where on the STMT of Cashflows?

A

Cashflows from Financing Activties

238
Q

How is Accretion Expense calculated for an Asset Reitirement Obligation?

A

accretion expense is calculated by multiplying the adjusted interest rate by the fair value of the liability ($100,000 × 10% = $10,000)

The cost of the ARO is allocated over the asset’s life and the interest is accreted…

239
Q

How does the Sinking Fund Balance change?

A

Increases from revenue earned by investments

or Decreased on losses by investments

Purchases of investments do not reduce the balance but rather just changes the composition

240
Q

Comprehensive Income may be displayed in two ways on the Stmts…

A
  1. A separate stmt that begins with Net Income
  2. A continuation of net income presented at the bottom of the income stmt
241
Q

How does a Quasi Reorganization affect Stockholder’s Equity

A

To reduce a deficit in the RE account, Contributed Capital is reduced by the Deficit and RE is increased by this amount.

Paid-in capital (Deficit amount)

Retained earnings (Deficit amount)

242
Q
A

Cost at base-year prices×Price index

=Dollar-value LIFO inventory cost

12/31/Y1 layer $300,000×1.00=$300,000

Year 2 440,000/400,000= 1.10

Use change in Base year cost, 400- 300= 100

12/31/Y2 layer 100,000×1.10= 110,000

Inventory at 12/31/Y2 $410,000

243
Q

When are contributed services recognized as contribution revenue?

A

Only recognizd if they create or enhance nonfinancial assets or require specialized skills that would have otherwise been

244
Q

Actual interest expense is dependent on…

A

The length of time the bonds are outstanding.

No the amount of payments, acrued interest in between interest payments

245
Q

When is compensation expense recognized for Stock Option?

A

Determined at the grant date and tehn allocated to the periods in which the employees perform the services.

246
Q

When common stock and preferred stock are issued in a lump sum purchase, how are the proceeds allocated?

A

APIC for each is allocated by its respective % of the total FMV of the share x the proceeds

FMV of C/S = 36,000 (36 x 1000 sh)

FMV of P/S = 54,000 (27 x 2000 sh)

Total Proceeds = 80,000

Total Fair Value= 90,000 (54k + 36k)

Proceeds Attributable to P/S =

54,000/90,000 = 60% = 60% x 80,000 Lump sum

48,000

247
Q

When does APIC increase for a Stock Subscription?

A

Apic increases on the date the subcription is Recorded—

Not on the date paid for or issued

248
Q

When are dividends in arrears for Cumulative Pref Stock accrued?

A

When declared

If a year passes and no Cum Pref Stock is decalred, then the dividends in arrears are included as a disclosure, not an accrual

249
Q

How is a transfer of a Non-Monetary Asset to a shareholder reported?

A

Gain or loss is the difference between the FMV of the asset distributed at the date of distribution and its carry amount on the books

Effect on RE is the Carrying Amount of the asset

Gain or Loss recorded when the asset is distributed offsets the orginal effect of the debit to RE and it is a wash

250
Q

Goodwill should be tested for value impairment at which of the following levels?

A

Each Reporting Unit

251
Q

How does one calculate total available total budgetary fund balance?

A

Appriopriations

(-) Expenditures

(-) Encumbrances

= Funds available

252
Q

What is an example of the expense recognition principle of associating casues and effect?

A

Sales Comissions,

which are an expense on the basis of a presumed direct association with related sales revenue

253
Q

What is the remaining Useful Life of an Intangible Asset witha Definite Useful Life?

A

Lesser of Useful Life or Legal Life

254
Q

Which situation would cause the Unreserved Fund Balance to increase?

A

Appropriations exceed actual expenditures

255
Q

Acid Test (Quick Ratio)

A

Found by dividing quick assets (assets that can be quickly converted into cash) by current liabilities

Cash + Net Receivables + Marketable Securites

Current Liabilities

256
Q

What is the test for Impairment of Goodwill?

A

Is Fair Value of the Reporting Unit less than the Carrying Amount?

Carrying Amount - FV = impairment loss

Loss is reported on the income statement

257
Q

For liabilities, the transaction or event causing the obligation must have….

A

Occurred.

Receiving prepaid insurance triggers Unearned Revenue which is a Liability

258
Q

Stated rate of Interest on a Bond is less than the effective rate on a Bond….

A

Bond is selling at a discount.

Interest Expense is greater than the cash pashment to bond holders

259
Q

Stated rate of a Bond is greater than the effective rate this bond….

A

will have to sell at a premium

An interest expense that is less than the cash payment made to bondholders

260
Q

Budgetary Accounting Journal Entries

A

Dr. Estimated Revenues 30,000

Cr. ***Estimated Other Financing Uses 90,000

Cr. Appriopriations 27,000

Cr. Budgetary Fund Balance 2,100,000

*** Estimated Other Financing Uses could be a estimated transfer to a debt service fund

261
Q

What effect does a stock dividend on Total Stock Holder’s Equity?

A

NONE.

Retained Earnings 300,000

Common Stock 10,000

Paid in Capital 290,000

262
Q

Comprehensive Income applies to which of the following entities?

A

Enterprises that develop a full set of financial statements which report cash flows, results of operations, and financial position

263
Q

In personal financial statements, how should estimated income taxes on the excess of the stimate dcurrent values of assets over their tax abses be reported in the stmt of financial condition?

A

Between Liabilities and Net worth in the statement of financial condition.

264
Q

How are gains reported for involuntary conversions?

A

On the Income Statement in the year of the gain

But for tax purposes the gain is NOT recognized in the year of the game a temp. difference is created

This results in a Deferred Tax Liability

265
Q

What rate is used to calculated quarterly interm Income Tax?

A

The effective annual income tax rate

266
Q

Loss contingenciues that are imminent…like an expropriation of assets…should be accrued or disclosed?

A

Both accrued and disclosed

Imminent means probable and loss contingencies that are probable are both accrued and disclosed

267
Q

Foreign Currency Exchange transacations should be included in….

A

As a Component of Income from Continuing Ops

268
Q

How is total compensation expense calculated?

A

of Option Shares

X Value of Each Option (Black Sholes)

= Compensation Expense

Than allocate expense over period intended to compensate

269
Q

5 Equal Deposits in a fund taht will earn interest should be calculated with what type of FV factor?

A

Future amount of annuity in advance of $1

because the last payment is made one year prior to the date the future amount is needed

270
Q

Does US GAAP or IFRS mandate interm reporting?

A

IFRS does NOT mandate interim reporting

GAAP does provide minimum guidelines for reporting

However, when interim reports are required, four financial statements are required: the statement of financial position, the statement of comprehensive income, the statement of changes in equity, and the statement of cash flows. For consistency purposes, the entity must use the same accounting policies as used in year-end financial statements.

271
Q

During a business acquisition, how much does the Net Assets increase of the Investor?

A

The Net Assets of the Investor increase by the total fair value of the purchase.

Company A issues 100,000 of stock for Company B with Net Assets worth 60,000

Company A’s Net Assets increase $100,000

Finder Fees are expensed in the period

272
Q

How are loan origination fees reported?

A

Loan origination costs are added to the principal by the lender.

Therefore they are deferred and recognized over the life of the loan as an adjustment of yield.

273
Q

Percentage Depletion for Tax and Depletion Expense for the Books creates what kind of Tax Difference?

A

Permanent Tax difference, no need for DTL

274
Q

How do GAAP and IFRS report Nontrolling Interests?

A

GAAP reports Nontrolling Interest at Fair Value

IFRS reports Noncontrolling Interest at either Fair Value or the proportionate share of the value of identifiable net assets of the acquiree.

275
Q

Convertible Bond Journal Entries

Book Value Method (No gain or Loss)

A

300,000 Bonds, each 1,000 bond into 10 sh/ at 50 Par

Converted into Common Stock at FMV of $75/sh

Unamortized Premium on Bonds Payable= 6,000

Dr. Bonds Payable 300,000

Dr. Premium on BP 6,000

Cr. Common Stock 150,000

Cr. APIC, plug 156,000

If there was a discount…

Dr. Bonds Payable 300,000

Cr.. Discount on BP 6,000

Cr. Common Stock 150,000

Cr. APIC, plug 144,000

276
Q

If a long term note payable is in violation of its agreement, is it a current or long term liability?

A

Current liabilities also include long-term obligations that are or will be callable by the creditor because the debtor has violated a covenant in the debt agreement.

The entire loan, not just the current portion would become a current liability

277
Q

Life insurance expense is = to….

A

The amount charged ot expense is the amount of such premiums paid less the increase in cash surrender value during the period.

Insurance Premium, 5,000

Cash Surrender Value increased from 22,000 to 25,000

Dr. Insurance Expense 2,000

Cr. Cash 2,000

278
Q

How are deductions for Capital Expenditures treated under Cash Basis Accounting?

A

No current deduction for capital expenditures

The expense for capital expenditures will be recognized in the form of depreciation, amortization or depletion.

279
Q

A non for profit issued long term tax exempt bonds for the hospital’s benefit. The hospital is responsilble for the liability.

Which fund should the hospital use to account for the Liability?

A
  • Unless specifically designated for a defined purpose, hospital debt is used for the general benefit of the entity and is secured with a pledge of collateral (such as a building or major equipment) that would have the item classified as a general fund obligation rather than a specific-purpose obligation.
  • Debt for an enterprise fund can only be classified in such a fund if the debt incurred for that enterprise activity is secured solely by the revenues of that fund
280
Q

Total net assets is comprised of:

A

Three Categories

Unrestricted

Temporarily Restricted

Permanently Restricted

281
Q

What do Support Services consist of for NFP Entities?

A

Support services consist of fundraising expenses, management and general expenses, and membership development expense

282
Q

How shall the lessor account for the Gross Investemnt in a Direct Financing Lease initially?

A

The Sum of:

The minimum lease payments

and

The unguaranteed residual value accruing to the benefit of the lessor

283
Q

When is Revenue from Derived Taxes (sales taxes, etc) recogonized?

A

Revenues from derived tax revenues are recognized in the period when the underlying exchange has occured (in the period the taxed sales transaction took place).

284
Q

Financial Statements prepared under which of the following methods include adjustments for both specific price changes and general price level changes?

A

Current cost/constant dollar

285
Q

Which method of Business Combination creates a Third Entity?

A

Statutory consolidation refers to the merging of two enterprises into a newly established enterprise.

286
Q

A development stage enterprise should use the same GAAP that apply to established operating expense for:

A

Revenue Recgonition and Deferral of Expenses

287
Q

Liabilities for Foreign Exchange Transacations occur when:

A

The liability occurs when the sale occurs or TITLE changes…

Not when the order is placed

288
Q

Direct costs of business combination, other than registration and issuance costs of equity securities, should be:

A

deducted in determining the net income of the combined corporation for the period in which the costs were incurred

Stock registration and issuance costs are netted against proceeds as a debit to APIC

289
Q

An entity should recognize the fiar value of an Asset Retirement Obligation in the Period:

A

In which the obligation is incurred if a reasonable estimate of fair value can be made

290
Q

Fair Value Through Profit and Loss

IFRS

A

Remeasured to fair value each reporting period

PROFIT or LOSS is recognized in income for the period

291
Q

What qualifies a measure as being fit to be included in Segement Reporting?

A

Is the measure reported to the Chief Operating Decision Maker

292
Q

Unrealized Gains which are permanently restricted as to use by donors by a Private NFP Hospital…

A

Are reported on teh Stmt of Changes in Net Assets

If unrestricted…they are reported on Stmt of Operations

293
Q

An entity should recognize the fair value of an asset retirement obligation in the period in which it is incurred if a reasonable estimate of fair value can be made

Record the Initial Liability of the ARO.

A

Dr. Carrying Value of Asset 1000

Cr. Asset Retirement Obligation 1000

294
Q

When

A
295
Q

Exceptions of Non Monetary Exchanges

A

When one of these exceptions is met, do not record a gain and use the book value and not the fair value

  1. Fv is not determinable
  2. Exchange transacation is to faciliatte sales for customers
  3. Exchange lacks commercial substance
296
Q

WHen an officer dies, in which a life insurance policy was present, what gain or loss is recorded?

A

At the time of death of an insured officer or employee, a gain would be recognized equal to the excess of the face amount of the policy over the cash surrender value at the time, as presented:

297
Q

Extroadinary Items and Special Items under GASB

A

Extrordinary Items are Unusual and Infrequent

Special items are unusual and infrequent, and also the result of Management decisions and under their control

298
Q

Company has a van destoryed. Vans carryinga mount was 2500, Installed a newe engine for 700 and pays 500 for repairs.

Received 3500 in insurance payments, what gain or loss?

A

New Engine gets capitalized to the Cost of the van.

2500+700= 3200

Repairs are expensed

3500 Insurance Proceeds MINUS Adj Carrying Value 3200

300 gain

299
Q

How is a contigency Loss Recorded?

A

Be accrued by debiting an expense account and crediting a liability account or an asset account

300
Q

IFRS vs GAAP

Contigencies and Provisions

A

Under IFRS if an item is more likely than not (51%) to be a loss, a Provision for the loss is reported in the balance sheet and a loss on the income statement

GAAP a contigency liability is credited and an expense account is debited

301
Q

Capital expenditures

A

Not normal recurring exenses, they benefit operations of more than one period

302
Q

Cash receipts from grants and subsidies

A

FAR (23 decks)

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