FAR Y101-200 Flashcards
The entity that has controlling financial interest over a Variable Interest Entity is called the _____.
Primary Beneficiary
Trading Securities are presented at what amount on the B/S?
FMV
Under IFRS, is the direct method of cash flows for operations permitted?
Yes, the direct and indirect methods are both permitted under IFRS
Under IFRS, when a class of fixed assets is revalued, asset acct is DR or CR. What is opposite side of entry?
Revaluation Surplus Account (Stockholders’ Equity & OCI)
Under IFRS, when is a contingent gain recorded?
Contingent gains are not recorded under IFRS. If it is probable, a footnote disclosure may be made
Under what ceircumstance can an entitiy, following IFRS, net their deferred tax items?
IFRS allows for netting of deferred tax items for the same taxing authority
What 2 conditions must be met for infrastructure assets (eg roads) not to be depriciated?
- Assets tracked by mgmt 2. Documentation is made regarding the assets.
What 2 funds require the use of budgetary accounts?
General Fund and Major Special Revenue Funds.
What amounts are included in the capitalized cost of an asset?
All costs assoc with getting the asset into use: invoice price, sales tax, shipping, installation, testing
What are Cash-Basis, Modified Cash-Basis, Tax-Basis, and Regulatory-Basis are examples of?
OCBOA Other Comprehensive Basis of Accounting
What are examples of red flags that indicate a going concern issue?
Recurring losses, Neg cash flows, Default loans, Credit denial, Legal issues, Loss major supplier/customer.
What are script dividends?
Promises to pay dividends in the future
What are the 3 levels in the FV hierarchy?
Level 1, 2, & 3.
What basis of acctg is used by the governmental funds?
Modified Accrual
What basis of acctg is used by the proprietary funds, fiduciary funds & government-wide F/S?
Accrual Basis.
What do liquidating dividends represent?
A return of capital to stockholders.
What does operational accountability measure?
How effective & efficient the organization has been
What does the acronym CAFR stand for?
Comprehensive Annual Financial Report
What does the acronym FRACA stand for?
Foreign Currency Translation, Revaluation Surplus (IFRS),
What funds are not included in the government-wide F/s?
Fiduciary Funds
What happens to the equity accts of the entity acquired when acquirer consolidates their F/S?
They are eliminated & replaced with non-controlling interest-which is measured at FMV.
What is a complex capital structure?
A capital structure having securities that can potentially be converted into CS.
What is a fair value hedge?
One that uses a derivative instrument to hedge exposure to changes in FV of an asset or liab
What is an annuity?
A stream of equal pmts over a period of time
What is emphasized by interim F/S?
Timeliness. (Not reliability, interim F/S are not audited)
What is market capitalization threshold for an issuer to be considered a Large Accelerated Filer?
$700,000,000
What is push-down accounting & who requires it?
Acquired company restates to FV, as aquirer’s books reflect. Recognize GW. Lowers future Net Income. Optional for all.
What is segment reporting?
Disclosure of the entity’s info regarding various components of their operations.
What is the accounting treatment for a lease bonus?
Unearned revenue by lessor. Amortized over the life of the lease.
What is the accumulated benefit obligation?
The actuarial PV of compensation & yrs of service that have already been earned & performed.
What is the appropriate acctg treatment for unrealized gains/losses on Avail-for-Sale Securities?
OCT
What is the appropriate acctg treatment for unrealized gains/losses on Avail-for-Sale Securities?
OCI
What is the basic formula for the B/S of a governmental entity?
Assets + Deferred Outflows = Liabs + Deferred Inflows + Fund Balance
What is the basic JE for recording a budget?
DR Est Renues Control, CR Appropriations, DR/CR Budgetary Fund Balance
What is the basic layout of the multiple step income statement?
Income from Contin Op, Disco’d Op, Extraordinary Items, Accumulated OCI
What is the calculation for comprehensive income?
Net Income plus Other Comprehensive Income
What is the calculation for net worth on personal financial statements?
Assets - Liabs - Estimated Tax = Net Worth
What is the corridor approach used to determine?
the Miminum Amount of Amort of Unrecognized Gains/Losses from prior periods
What is the difference between basic and dilutive EPS?
Dilutive EPS takes into account items that may potentially reduce EPS.
What is the difference between the cost method and the par value method?
When the gain/loss is recorded. Cost: when treasury stock is resold. Par: when stock is purchased.
What is the formula for basic earning per share?
NI-CY PS dividends // Weighted-Avg # of CS shares outstanding
How do you calculate Current Year Peferred Stock Dividends?
Par value x Interest Rate
What are the 2 methods to calculate Weighted Average # Common Shares Outstanding?
Cindy’s method and the Textbook method
How do you calculate Weighted Average # Common Shares Outstanding?
Cindy’s method: # shares on 1/1 *12/12 + Purch as of date thru end of year. STOCK DIV take YTD weighted avg * Div %. -Treas Stock Date to EndOfYear
How do you calculate Weighted Average # Common Shares Outstanding?
Textbook method: # shares beg year time x/12 for # months until next event *Stock Div% until Stock Div Date.
What is the formula for diluted earning per share?
NI-PS dividends // Weighted-Avg # of CS shares outstanding
What is the formula for the physical usage depreciation?
Depreciable Base x (current period usage // total estimated usage)=current period depr exp
What is the IFRS equivalent of US GAAP Stmts of Financial Acctg Concepts?
Framework for the Preparation & Presentation of Financial Statements (provide underlying concepts)
What is the IFRS equivalent of US GAAP term “Net Income”?
Profit
What is the JE to close the budget?
DR Appropriation Control, CR Est Rev Control, DR/CR Budgetary Fund Balance
What is the JE to record the encumbrance when a new vehicle is ordered?
DR Encumbrance, CR Reserve for Encumbrances (Then reverse for exact amt)
What is the market capitalization range for an issuer to be considered an accelerated filer?
$75,000,000 - $700,000,000
What is the percentage threshold for determing if sales leaseback is major or minor?
If the (PV of future min lease paymts) ? (10% of selling price), it’s minor.
What is the primary focus of the proprietary funds?
Economic Resource Focus, Income Determination & Statement of Cash Flows.
What is the Projected Benefit Obligation?
The Actuarial PV of future benefit payments.
What is the threshold for recognition according to SFAC 8?
Materiality if the threshold for recognition
What is treatment for realized & unrealized Trading Securities gains/losses?
Recognized on the Income Stmt
What makes financial info relevant?
Predictive &/or Confirmatory Value, Materiality
What type of component unit presentation calls for the CU to be shown in a column to the right on GW FS?
This is called Discrete Presentation.
What types of profis is earned by a lessor on a sales-ty[e lease?
Gross Profit and Interest Income
When a bond is issued with a non-detachable stock warrant, is the APIC-Stock Warrants acct utilitzed?
No. They don’t have a determinable market value. The entire amt is recorded as Bond Payable.
When an investor obtains
Trading Securities or Available-for-Sale Securities. (Stock cannot be held-to-maturity, only bonds)
When are expenditures for principle & int recorded, under modified accrual?
When legally due
When debt terms are restructured, how does the debtor account for the restructuring?
By reducing interest expenses through the remaining life of the loan
When does partnership dissolution occur?
When there is a change in partners. New, retired, death. Business continues.
When ending inventory decreases under LIFO, what is the result on net income?
End Inv is lower, COGS is higher, Net Income in lower.
When is a public company required to present both basic and diluted ESP?
When it has a complex capital structure
When is revenue generally recognized?
- When realized or realizable & 2. When earned.
When is revenue recognized under the modified accrual basis of accounting?
When measureable & available (Property Tax-Up to 60 days, other taxes up to 180 days from B/S date)
When must a Large Accelerated Filer file 10-K and 10-Q?
10-K,60 days after yr end. 10-Q, 40 days after qtr end
When reclassing AFS to Trading Securities, what is the acctg treatment for the unrealized gain/loss?
Unrealized gain/loss is recognized in the I/S immediately upon reclass.
When should a loss contingency be accrued under US GAAP?
When the loss can be reasonably estimated & the loss is probable.
When the expected return on plan assets differs from the actual return on plan assets, this is called a(n)___.
Acturarial Gain/Loss.
When using percentage of completion, when is revenue and profit recognized?
Throughout the contract term, if dependable estimates can be made
Where do the Governmental Funds present Fixed Assets and Long Term Debt?
In the Government-Wide F/S only.
Where does IFRS require significant non-cash investin g & financing activities to be disclosed?
In the notes to the F.S.
Where is the effective portion of a cash flow hedge recorded?
OCI
Where is the foreign currency translation adj recorded when using the current rate translation method?
On the B/S - Stockholders’ Equity Section - OCI
Which revenue recognition method for construction contracts is allowed under GAAP, but not IFRS?
Completed Contract Method
Who does segment reporting apply to?
Publicly traded entities
Who wrote the Statements of Financial Accounting Concepts?
FASB
What are Service Costs?
Service Costs are the actuarial PV of benefits for employee services during the current period
Where does US GAAP require info related to significant non-cash investing for financing activities to be disclosed?
On the face of the statements or in the notes.
How are tuition & fees for a university presented on the statement of activities?
Tuition and fees are presented net of scholarships and fellowships.
How are derivative instruments measured?
Using fair value
When does a not-for-profit entity record a temporarily restricted expense?
Never. All expenses are unrestricted and reduce the unrestricted net assets.
Name the 3 expense categories that must be presented in a NFP entity’s Stmt of Funtional Expenses.
Programs, Management & General & Fund Raising
What is regulation SX?
These are the instructions for form 10-K. Reg SX provides the form & content of the F/S for SC reg.
How is Goddwill recorded in a business combination?
If FV of consideration trans. + FV prev held equity int + FV of non-conrol int. > FV net id assets. Else Barg Purchase Gain.
What is an extraordinary item per GAAP? Per IFRS?
GAAP: Infrequent & unusual. IFRS does not allow extraordinary items
If a sales lease-back transaction is considered to be minor, how is the gain or loss recorded?
When the transaction is minor, the entire gain can be recognized
What is the treatment of legal fees to acquire an entity?
Legal fees are expensed
What is the appropriate GAAP treatment of start-up costs?
Start-up costs are to be expensed under GAAP (For taxes, cap costs over 15 year)
How are the primary beneficiary’s FS effected by the Variable Interest Entity?
The primary beneficiary of a VIE is required to present consolidated FS that include the VIE
What additional info is shown on the IS and Stmt of Cash Flows for a developmental stage entity?
Developmental Stage Entities must show CUMULATIVE AMTS on IS & Stmt of Cash Flows
Define contingency under IFRS.
An event that is NOT recognized bc it is not probable that an outflow will occur
Name the 2 types of accountability related to the Governmental Reporting Model.
Operational & Fiscal
Which fund is shown in a separate column on the Govt-wide FS?
Enterprise Funds
Name the 5 elements of FS according to IASB.
ICE ALE Assets, Liabilities, Equity, Income, Expenses, (Capital Adjustments)
Is the direct method of cash flows permitted when using IFRS?
Yes. IFRS permits the use of the direct or indirect method
