FAR - NFP & Other Flashcards
How is donor revenue containing restrictions met in same period classed?
It can be classed as unrestricted revenue, support contribution. This must be disclosed and consistently applied.
How is receipt of donated utilities classed?
They should be classed as contributed assets and not services.
Where are debt securities and investments reported?
They should be reported at fair value in the statement of financial position. The most reliable source is ‘quoted market prices.’
Governmental: What are examples of categories of fund balances
Nonspendable (e.g. inventory), restricted (e.g. grant), committed (designated by government), assigned (designated by management to cover encumbrances), and unassigned (general fund assets not designated)
Governmental: Where should costs of securities lending transactions be reported?
They should be reported as expenditures/expenses in the operating statement and should NOT be netted with income from cash collateral.
Disposal of assets: when an entity is classed as held for sale, what needs to take place?
If necessary it must first be written down to fair value. A loss is recognized for the writedown to FV less costs to sell.
Where is internal goodwill recognized?
It’s recognized as an expense and cannot be capitalised. Goodwill is subject to impairment.
How is revenue from service contracts reported?
All proceeds from service contracts is deferred. Then the deferral is reduced as the service is performed.
When must research and development costs be expensed under US GAAP?
R&D = costs incurred prior to technological feasibility for software to be sold/leased/marketed. If it’s for internal use, not R&D. Market research isn’t for specific product/service development so it’s also not R&D.
Where is a non-controlling interest reported?
It’s reported in owners’ equity per FASB ASC 810. NCI is portion of equity (net assets) in a sub not attributable directly/indirectly to a parent. It’s also called a minority interest, e.g. 20%.
How much liability should be accrued for a loss contingency that is probable when a range is given?
If a range of probable loss contingency can be estimated, the minimum of the range should be recorded if no amount within the range is a better estimate than any other amount.
What are the components of a lease receivable for a lessor involved in a direct financing lease?
The minimum lease payments PLUS residual value. The lessor measures gross investment in a direct financing lease by sum of min lease payments and unguaranteed residual value accruing to lessor.
Extra credito: (Direct financing lease is capital lease which doesn’t give rise to dealer profit. Lessor recognizes just interest revenue on receivable - no profit margin).
(Lessee can guarantee residual val of leased asset at end of term - then gross residual value is included in min lease payments. Capitalised as asset by lessor and liability by lessee).
When should you not capitalize a patent?
If the patent was not successfully defended in court, you must expense the patent cost, legal fees to defend it, and acquisition costs. If successful, all above can be capitalised.
How do you calculate rental revenue when provided with opening & closing rent receivables and opening and closing unearned rent?
Use BASE but Beginning balance = beg. unearned rent - beg. rent receivable. Add cash collections. Subtract (solve for) rental revenue. Ending balance = ending unearned rent -ending rent receivable.
At what level should goodwill be tested for impairment per US GAAP?
At the reporting unit level - 1.) assign assets & liabilities & goodwill to the reporting units. Compare the net carrying value to the undiscounted future cash flow expected. If net carrying value is greater than 2.) record impairment loss as difference between FV and net carrying value. Once recognized, a loss cannot be reversed.
Under IFRS, impairment should be tested at the cash generating unit level (Reporting unit level for US GAAP).
When testing impairment under IFRS, it’s 1 step: compare CGU’s carrying value to recoverable amount which is the greater of a.) FV less costs to sell and b.) value in use (PV of future cash flows)
