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FAR - JH Flashcards

1
Q

Income - Accrual accounting

A

Cash to Accrual (Liab.-add BEG; subtract END/Asset - subtract BEG; add END)
Accrual to Cash (same as SOCF)

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2
Q

Expense - Accrual accounting

A

Cash to Accrual (same as SOCF)

Accrual to Cash (Liab.-add BEG; subtract END/Asset - subtract BEG; add END)

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3
Q

Decision Usefulness: 2 Primary Characteristics

A
  1. Relevance - Predictive value, Confirmatory value, Materiality.
  2. Faithful Representation - Completeness, Neutrality, Free from Error.
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4
Q

4 Enhancing Qualitative Characteristics

A

Comparability, Verifiability, Timeliness, Understandability

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5
Q

Definition of current asset’s operating cycle

A

Operating cycle of one year or less - WHICHEVER IS LONGER!

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6
Q

Consolidated F/S accounting concept - which entity?

A

Economic entity

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7
Q

Going Concern assumption supports…

A

Supports historical cost; not @ liquidation value.

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8
Q

Fair value based on “what” price and transaction

A

Based on EXIT price and a hypothetical transaction

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9
Q

HTM is measured at what option?

A

Amortized cost & FV

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10
Q

Form 10-Q periods presented

A
  1. B/S - quarter; PY FYE
  2. I/S - quarterly and YTD and PY quarterly and YTD
  3. CF - cumulative YTD for CY; PY FYE
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11
Q

Large accelerated filer ($700M or more)

A

10-K - 60 days ; 10-Q - 40 days

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12
Q

Accelerated filer ($75-700M)

A

10-K - 75 days ; 10-Q - 40 days

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13
Q

Non-accelerated filer (less than $75M)

A

10-K - 90 days ; 10-Q - 45 days

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14
Q

IASB Monitoring Board

A

Appoints trustees of IFRS Foundation

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15
Q 
IFRS Foundation (22 members) appoints 3 who?
IFRS Foundation responsible for what?
A
  1. IASB Members
  2. IASB Interpretation Committee
  3. IASB Advisory Council

Fund-raising for entire operations for the IASB.

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16
Q

IFRS Interpretation Committee is…

IFRS Advisory Council is…

A
  1. Emerging Issues Task Force

2. Advises IASB on priorities, cost-benefit, etc.

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17
Q

2 Assumptions under IASB Framework (no enforcement)

A
  1. Going Concern

2. Accrual Basis

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18
Q

IFRS for SMEs for inventory valuation approaches

A
  1. FIFO or;

2. Weighted Average

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19
Q

IFRS requires what classifications for Stmt of Fin. Position?

A

Current & Non-current assets and liabilities

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20
Q

What are the 4 items in Stmt of Comprehensive Income?

A
  1. Unrealized gain/loss on AFS securities
  2. Unrecognized pension/post-retire benefit cost
  3. Foreign currency transaction adjustments
  4. Certain deferred gains/losses from derivatives (hedges)
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21
Q

What’s included in personal F/S?

A

Stmt of Fin. Position & Stmt of Changes in Net Worth

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22
Q

What is the purpose of the Private Company Council?

A

To assist the FASB in identifying whether and when a private company accounting standard should be developed.

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23
Q

For IFRS SMEs, what accounting method can be used with significant influence?

A

Cost or Equity Method

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24
Q

All notes receivable are recorded how?

A

PV of future cash flows (> 1 yr); PV - any discounts will be amortized.

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25
Q

What are current & noncurrent notes receivable recorded at?

A

Current - Face value

Noncurrent - PV

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26
Q

Impaired note receivable are written down to?

A

PV of future cash flows expected to be collected using original interest rate; Loss or expense is recorded as difference b/t PV of CFs and original carry value.

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27
Q
  1. Interest method is collected…

2. Cost recovery method is collected…

A
  1. Each year

2. In total, but only when new carry value (PV of CFs) is received.

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28
Q

Inventory Costs includes what?

A

Freight-in, insurance, taxes paid, material handling/packaging costs, transport to consignees.

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29
Q

Inventory Costs does not include what?

A

Interest, advertising, freight-out, advance commissions.

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30
Q

What costs reduce inventory?

A

Purchase discounts & returns/allowances

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31
Q

Periodic Inventory (WA)

A

COGAS/# units available, multiply by either COGS or End Inventory, whichever you are calculating.

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32
Q

Periodic Inventory (Purchases) (FIFO)

A

HIGHEST Net Income
COGS - lowest (earliest) costs
End Inv - highest (latest) costs

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33
Q

Periodic Inventory (Purchases) (LIFO)

A

LOWEST Net Income
COGS - highest (latest) costs
End Inv - lowest (earliest) costs

34
Q

FIFO favors…

A

Balance sheet; approximation of CURRENT costs

35
Q

LIFO favors…

A

Income statement; approximation of NONCURRENT costs, but COGS CURRENT

36
Q

LIFO is bad and good why?

A

Minimizes profits & chosen to minimize income tax

37
Q

Dollar Value LIFO advantages are…

A
  1. reduces effect of liquidation problem
  2. allows to use FIFO internally
  3. reduces clerical costs
38
Q

Dollar Value LIFO (Conversion Index)

A

End Inv in CY dollars/End Inv in Base Yr dollars

39
Q

Cost-to-Retail Ratio

A

COGAS cost/COGAS Retail

40
Q

Retail Inventory Method (Calculate End Inv @ cost)

A

End Inv @ retail X C/R ratio

41
Q

End Inv Overstated equals…

A

COGS Understated (OPPOSITE)

42
Q

Beg Inv Overstated equals…

A

COGS & Purchases Overstated (SAME)

43
Q

IFRS vs. GAAP Inventory

A

IRFS

  1. LC or NRV vs. LCM
  2. Same cost formulas vs. may be different formulas
  3. Reversal of write-down permitted vs prohibited
  4. LIFO prohibited vs. permitted
  5. Cost flow assumption mirrors physical flow vs. does not
44
Q

AAE

A

Accumulated Average Expenditures

45
Q

Capitalized interest (2 methods)

A
  1. Weighted Average (total interest/total principal)xAAE
    Subtract cap. interest from total interest = int. exp
  2. Specific (capitalize interest on construction loans first,
    then other, if necessary.
    Subtract cap. interest from total interest = int. exp
46
Q

AAE

A

Int. exp is difference b/t total int. cost and int. capitalized

47
Q

AAE > debt

A

All interest is capitalized

48
Q

Post-acquisition expenditures depreciate over…

A

the SHORTER of its useful life or remaining life of larger asset.

49
Q

SL Method of Depreciation

A

Cost - salvage value / useful life

50
Q

Sum of Years Digit Method

A

(N(N+1))/2

51
Q

Double-Declining Method (SV not used)

A

Cost(2/N) ; i.e. Yr 2 = (Cost-depr yr1)(2/N), etc.

52
Q

Natural Resources contains…

A

Cost of acquiring, exploring, etc. ; does NOT include cost of extracting of resource

53
Q

Natural Resource (sum capitalized)

A

Acquisition, Exploration, and Development costs

54
Q

Depletion is…

A

Allocation of costs to inventory

55
Q

Depletion Rate

A

(natural resource acct balance-RV)/total est. units

56
Q

Depletion for a period calculation is…

A

(Depletion rate)x(# units removed in period)

57
Q

Extraction costs and Production costs

A

Debited to inventory, NOT natural resource

58
Q

PPE IFRS

A
  1. Est. useful life/depr. method reviewed annually
  2. Revaluation PERMITTED (ENTIRE class)
  3. Interest earned CAN BE offset by interest costs
59
Q

No Significant Influence (

A
  1. Trading - FV current, Unreal G/L in earnings, Real G/L not recorded, dividends are income.
  2. AFS - FV curr/noncurr, Unreal G/L in OCI, Real G/L recognized, dividends are income.
  3. HTM - Amort. cost, Real G/L recognized.
  4. Equity method - Real G/L recognized
  5. Cost method - No Unreal G/L, Real G/L recognized.
60
Q

Investment reconciliation

A

Initial cost (Purchase - accrued interest)
+ Interest revenue (Initial cost x mkt rate x time)
- Cash paid (Face value x state rate x time)
Investment @ B/S

61
Q

IFRS Investments (debt instruments)

A

Amortized Cost or FV; only debt instruments may be transferred b/t categories & RESTATED.

62
Q

Joint Venture contributions are measured at what value?

A

Carrying value

63
Q

Cost of stock rights formula

A

MV of one right/MV of one w/out right + MV of one right

64
Q

IFRS Investment Property valued at…

A

Cost or FV (subsequent measurement); GAAP -cost only

65
Q

Leasehold improvements amortization

A

SHORTER of useful life or lease life

66
Q

Cash surrender value - Revenue recognized

A

Proceeds less the cash surrender value

67
Q

Goodwill impairment is tested at what level?

A

Reporting unit level

68
Q

Goodwill defined as…

A

Excess of FMV of net assets acquired

69
Q

IFRS Intangibles

A
  1. Revaluation of goodwill ALLOWED in active market
  2. Reversal of impairment loss ALLOWED
  3. Goodwill recognized at cash-generating unit level
70
Q

For IFRS, what is the recoverable amount?

A

The greater of FV less costs to sell or value in use.

71
Q

To calculate deferred revenue

A

Beg DR+cash received-earned rev=End Rev

72
Q

Note payable (Discount)

A

Increases liability ; stated rate

73
Q

Note payable (Premium)

A

Decreases liability ; stated rate > market rate

74
Q

Stated rate

A

Determines cash payment of interest

75
Q

Convertible bond methods (2 types)

A
  1. BV Method - bond balances to stock accounts; no gain/loss recognized
  2. MV Method - stock accounts are credited to MV of stock/bond, bond accounts are closed, and gain/loss is recorded for difference. (MV stock vs. bonds - diff is gain/loss.
76
Q

Debt retirement (Gain/Loss)

A

When cash paid BV-DIC = Loss

77
Q

Number of issued shares consists of…

A

of O/S and Treasury

78
Q

Called or Redeemed Stock

A
  1. All OE accounts are removed and dividends in arrears are paid first.
  2. DEBIT diff goes to RE
  3. CREDIT diff goes to Contributed Capital
79
Q

Increase in contributed capital T/S scenario…

A

Reissue price>cost ; Purchase price

80
Q

Decrease in contributed capital T/S scenario…

A

Reissue priceorig. issue price

FAR (19 decks)

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