FAR Own Flashcards
What life do you use to amortize a patent?
The LESSER of the legal life or the economic life. (LESS years=MORE Amtz. expense)
What costs do you expense in computer software developed to be sold, leased, or licensed?
Costs incurred before technological feasibility has been established (planning, designing, coding and testing)
What costs do you capitalize in computer software developed to be sold, leased, or licensed?
Costs incurred after technological feasibility has been established and before the product is released for sale (coding, testing, producing product masters)
What is the equation to capitalized computer software costs developed to be sold, leased, or licensed?
GREATER OF: Capitalized Amount*Current Revenue/Total Projected Revenue
OR: Capitalized Amount *1/estimated Useful LIfe
Define a prepaid expense
Prepaid expenses represent assets where no benefits have been received yet. They are not officially expenses until they are associated with a BENEFIT
Define an accrued liability
Accrued liabilities represent benefits received but no cash has been paid out yet
Reconcile from cash basis to accrual basis
Add (+) increases in current assets and decreases in current liabilities
Subtract (-) decreases in current assets and increases in current liabilities
What is the minimum operating cycle for purposes of reporting a prepaid
12 months/ one year
When is revenue recognized under the completed contract method?
When the contract is COMPLETE (not when progress billings are collected or when they exceed recorded costs)
BUT: record expected losses immediately in their entirety
Percentage of completion: Balance Sheet presentation
CUMULATIVE Progress Billings - (CUMULATIVE Costs Incurred to date + CUMULATIVE Estimated Earnings) = NEGATIVE- current asset, POSITIVE - current liability.
A liability exists when progress billings exceed costs and estimated earnings. A liability to complete the project and catch up with progress billings **Estimated earnings is gross profit recognized
When do you recognized a gain in a non-monetary exchange that LACKS commercial substance
When boot is RECeived, you RECognized boot.
Recognize a proportional gain (
When a non-monetary transaction LACKS commercial substance, how do you report the NEW asset
When it lacks commercial substance, the reported amount of the non-monetary asset SURRENDERED (GIVEN) is used to report the new asset (FV GIVEN=FV RECEIVED)
What do you do when the boot received is greater than 25% of the total consideration given
Both parties consider the transaction a monetary exchange and gains and losses are recognized in their entirety by both parties
What should be disclosed under IFRS as far as related party disclosures are concerned?
Loans to Officers and Key Management compensation (Officers salaries)
NOT expenses: they are incurred in the ordinary course of business
How should transactions be recorded when denominated in a foreign currency? AKA what exchange rate?
The spot rate should be used on the date of the transaction, even if it is on account like for 30 days
NOT the 30-day forward rate
