FAR (Round 2 Deck) Flashcards
If it doesn’t qualify to go under ________ on the income statement then you should leave it in Continued Operations
Discontinued Op’s
Sales 250K, Purchase discounts 3K, Recovery of previously written off AR for 10K. What would be reported as revenue?
250K
When should gains and losses be recorded?
In the period that they actually occur
Comprehensive Income is defined as NI + OCI. So a common example of something that wouldn’t flow through either of these would be?
a dividend payment (Debit - RE, Credit - Cash)
Anytime you are doing a currency translation gain/loss calculation what should be the thought process?
What was the rate on the date of ordering/purchase. What should that JE have been? then at year end when you report what was the spot rate on the reporting date. Are you going to have to pay more/get paid more if payment had to occur in that moment at year end and that’s how you directionally if you are in a gain or loss.
Anytime you are making an entry that is a cash flow out, but the expectation is you’ll get it back (like a deposit) then you’ll record it as a ________ in the JE
noncurrent asset
Even if a gain is both unusual and infrequent where should it go under per U.S. GAAP?
“Income from continuing operations”
Where does depreciation expense fall on the income statement
Under Selling, General, and Administrative
Guiding light on if you need to include a disclosure on an expense?
If its considered “unusual”
Principles for accounting for discontinued operations?
- Does it qualify as held for sale? -> Then account for it by itself
-ALL operating losses should be included (not just from date that the decision to sell was made)
-Determine if impairment is needed at year end by taking the expected selling price less the net book value. If you are going to sell for less than its worth impair
-Determine tax income Benefit/ (Expense). If you have a loss you’ll get a benefit (loss * tax rate). If you have a gain you’ll get an expense (gain * tax rate).
1) Walk through parts on a multi-step income statement
2) How are prior year adjustments handled?
3) Where would gains on AFS debt securities go?
1) GP -> OI -> IFCO -> IBDO -> NI
2) Flow through Retained Earnings
3) OCI
Quoting an exchange rate using direct method means what?
You say my currency is _____ to 1 unit of the foreign currency.
Comprehensive Income (NI + OCI_ show’s you all the income from __________ sources
Non-owner
Foreign TRANSACTION gains/losses vs Foreign TRANSLATION gains/losses go where
Transaction (buying/selling and will affect cash flows) go on the income statement. Translation (from consolidating a foreign sub) go in OCI
OCI doesn’t include what kinds of activities?
Equity (Dividends or exchanges involving stock)
What’s gonna go in OCI?
Foreign Translation gain/losses, unrealized gain/losses on AFS debt securities, Pension, Cash flow hedge (not FV).
Disclosure accumulated OCI. How would you show adjustments?
in the statement where OCI items are at. NOT in the footnotes.
Inventory will go where on the BS?
In current assets
