FAR round 2 Flashcards
How do you calculate income tax expense on an interim statement?
Multiply year to date income by effective tax rate for that year and subtract the income tax expense recorded in the previous quarter.
When there is a change in entity for GAAP purposes what do you do?
Restate the FS of all prior periods presented.
How are income statement items translated?
Translated using the weighted-average rate for the current year
When do you use the translation method?
If the foreign sub’s local currency is the functional currency and the foreign entity is not highly inflationary.
What fund accounts for levies (special assessments) on affected property to owners?
Capital projects fund
Where would the reconciliation of governmental funds to government-wide presentations be found?
Either the face of the FS, or in the accompanying schedules with expanded disclosure in notes to the FS (both are components of the basic FS)
For a voluntary health and welfare organization, where is depreciation expense recorded?
It is included as an element of “expense” in a statement of activity.
How is interest incurred during a construction period treated?
It is capitalized based on weighted avg of accumulated expenditures. Interest incurred before or after construction (or during intentional delays) is expensed.
How is operating lease expense calculated?
Recorded evenly over the life of the lease
What are the criteria for recognizing a liability associated with exit or disposal activities?
- An obligating event has occurred
- The event results in a present obligation to transfer assets or to provide services in the future
- The entity has little or no discretion to avoid the future transfer of assets or providing of services
What should management and general expenses incurred by a NFP be classified as?
Supporting services in the statement of activities.
What is the treatment of G/L if lacking commercial substance?
Losses recognized, gains only recognized if boot/cash is received.
What is the treatment of G/L if having commercial substance?
Losses and gains recognized.
Marketable securities are valued as of what date for NFP?
Balance sheet date
