Far Module 3 Flashcards
Restoration costs associated with depletion should be
Added to the depletion base
Impairment Loss is equal to
Carrying value of the assets less the fair value
Impairment test if sum of expected discounted future cash flows is less than
the carrying amount impairment needs to be calculated
Doublde declining balance calcualted by taking
value of asset time 2/n dont take out salvage value
Depreciation and composition should be disclosed in significant account policies
Depreciation yes composition no
To calculate composite depreciation
Estimates cost less salvage calue is depreciaple cost add all up
estimated cost less salvage value / years gives annual depreciation divide depreciable cost by annual depreciation
Accumulated depreciation when impaired
1)Take accumulated depreciation then add
Take the cost of the asset less the accumulated depreciation and then subtract the carrying value-This is your loss
Then add the new depreciationa nd this is your total accumulated depreciation
Depletion amount calcultion
Take amount purchased then add extraction costs then subtract amount to be sold for then divide by anticipated units extracted if you were calculating depreciatione expense it would be number of sold units that count
Sum of years digits dont subtract out depreciation
multiple depreciable base each year by new number of remaining years over sum of years digit base
If carrying value is greater than fair value it is
impaired
Youd correct a depreciation error in the year it happened
if uou have an asset that costs 900k then you have 6 year life in year 3 you catch the error you correct it if have impairment loss take 900-300=600 for annual 150k depreciation then 600-200=400k/4 years since caught in year 3
Account analysis to solve for accumulated depreciation when given
Ichor Co. reported equipment with an original cost of $379,000 and $344,000, and accumulated depreciation of $153,000 and $128,000, respectively, in its comparative financial statements for the years ended December 31, Year 10, and Year 9. During Year 10, Ichor purchased equipment costing $50,000, and sold equipment with a carrying value of $9,000. What amount should Ichor report as depreciation expense for Year 10?
First you take the beginning of the cost for year 9
344,000
Add 50000 purch
=394000
solve for the x that gets you to ending
379000
=394-379=15K then take out the 9k for 6K AD
To solve for year 10 AD
Take 128000 AD for year 9
solving for what to add =159000-128000=31000which is your ad
solving for this below=153+6K=159000
move the 6000 over for ad
153000 ending balance
Impaairment losses are shown as income from continuing operations before tax
To test for impairment undiscount future cash flows is compared to carrying value if
impairement exists fair value can be used to determine this loss
When calculating the carrying value you subtract the original cost minus accumulated depreciation not
og cost-selvage value-ad
Helpful hints for bank reconciliation TBS
If it is our bank account and we void the check that would be an addition to the book balance account Check for items that were not recorded such as deposits we added to book that don’t show up on the bank statement you would need to add that too. Deduct any outstanding checks from the bank balance that have not cleared the bank. If there is a fee associated with NSF check then that category should be nsf fee
Caash aand caash equivilants
Maturity amounts less than or equal to 90 days from purchase
Checks that aare post dates after the balance sheet date should not be included in cash
aand caash equivilaant
Cash in sinking bond fund is
restricted cash
The book balance is what is reported on the
balance sheet
To find the amount of cash disbursement in a bank first if their are items that were outstanding such as checks in prior month that cleared the bank in current month subtract
those amounts from the disbursements then add any outstanding checks this month back to get the total amount of disbursements.
Task baased simulation for reconciliations for cash and cash equivalent hints
Pay attention to if bank fees are paid if they are paid then you would debit them to reduce the liability
AAn investment account is credited to reduce the amount of the investment account
Take FMV of investments and marketable securities and add them together then subtract that amount from investments if included because these should be classified as cash and cash equivalents
If there is cash used for trust debit to reclassify as restricted cash and credit the trust to reduce it
If there is aa negative balance in a checking and no other account to offset debit the checking for the amount that it is and credit financial obligation
If you have a negative amount in another account and you have enough in your other accounts to offset it and that ios allowed in policy of bank then no entry required
To calculate the inventory when given sales for the month and average gross inventory rate
1-average percentage multiplied by the sales
If given goods aand they have not been picked up hy end of year and they are fob shipping point
Take the amount of sales multiplied by 1-average gross inventory rate this is the amount to be included in your ending inventory
If goods are on consignment and they are sold by end of year reduce by
amount sold times percentage sold
The cost to ship goods to a warehouse in included in price of inventory t or f
true
7
Part of the company’s inventory on hand at year-end is specific to New Year’s Eve. The value of that inventory decreases substantially if it is not sold before year-end. Remaining inventory of these items with an original cost of $50,000 was on hand at December 31, Year 1. In early January, Year 2, Party Supply sold these items for $10,000 and also paid $6,000 to have the inventory shipped to the buyer.
If inventory decreases in value if not sold by the end of the year take the amount
of inventory on hand then subtract the net amount of the amount sold less the amount paid and that is your ending inventory amount
Weighted average cost of inventory is calculated by taking
The total units in the denominator with the numeror being the total cost of units
To calculate the moving aaverahe of inventory only calculate each time there is a purchase not when sale
Calculated by ending inventory+mosy recent purchase aka total cost and divide by the current total quaantity