Far5 Flashcards
What is the purpose of reporting comprehensive income?
To summarize all changes in equity from nonowner sources.
What are the “other comprehensive income” items? (4)
Unrealized G/L on AFS securities, unrealized G/L on pension costs, foreign currency translation adjustments, and unrealized G/L on certain derivative transactions.
Who pays the shipping with FOB shipping point?
The title passes to buyer at the shipping point, so the buyer is responsible for paying the shipping charges.
Who pays the shipping with FOB destination?
The seller pays shipping charges to get the goods to the buyer. The title passes to the buyer once they reach their destination.
Under IFRS, how should a company report their investments in bonds when it is a part of their business model to hold such investments solely to receive the cash and interest from principal repayment?
At amortized cost.
Can impairment losses on intangibles be reversed?
No. Losses on plant assets held for disposal can be reversed to the extent of previous losses but intangible impairment losses cannot be reversed.
Which governmental fund type can report a positive amount in the Unassigned fund balance?
The general fund. Other governmental funds cannot have a positive balance in their unassigned fund.
In a sale-leaseback, how is the gain on sale recognized?
It is amortized over the lease term. A 50,000 unearned gain on a sale-leaseback over 10 years will result in 5,000 being recognized in each of the 10 years.
If a city imposes a 2% tax on hotel charges which will be used to promote tourism in the city, what type of nonexchange transaction is this?
It is a Derived Tax Revenue.
How are the different governmental funds reported on the fund-based balance sheet?
The general fund has its own column, then the major funds each have their own column, and then the rest of the individual funds that are not considered major are grouped into a single column.
A fund balance is the amount of assets greater than liabilities. What are the different classes of the fund balance?
Unrestricted- which means it’s none of the below and is available for future use.Nonspendable and restricted. This means the money is restricted as to use by an outside party.Committed means the money is committed to a specific use by the highest level of decision making.Assigned means the money has been assigned by officials that are NOT the highest level of authority.
If a city plans on collecting $10k a month from property taxes for the next 18 months, how much revenue should be reported in year one?
$140,000. 10k for each month of the year plus Jan and Feb of the following year.
How is $10k of bonds reported on the gov wide and fund-based statements?
They are a regular liability on the gov wide statements and “other financing source” on the fund based statements.
How is a bond due in 3 months reported on the gov wide & fund-based statements?
It is ‘bonds payable’ on both.
If a city takes on a project but accepts no liability for the work being done, what type of fund is used.
An agency fund.
How does a transfer from the gen fund to capital projects get reported?
The general fund shows a “other financing use”, the capital projects fund shows a “other financing source”, and both balances will show up in the total gov funds column. This are no eliminations of “intercompany transactions”.
What is the difference between the purchases method and consumption method for the government fund accounting?
Under purchases, the whole purchase is immediately recognized as an expenditure. Under the consumption method, the supplies are moved to expenditures as they are used.
Is a computer or office supplies reported as an asset on the fund-based governmental statements?
Office supplies are an asset- capitalized assets such as a computer are not.
how is a capital lease recorded in the gov fund-based statements?
The PV of the payments is recorded as an expenditure, and an increase in ‘other financing sources’.
Do infrastructure assets get depreciated?
They do unless the modified approach is adopted. Then you have to set a minimum level of acceptable condition and maintain documentation to show that the asset is kept at that level.
For general purpose gov statements, is MD&A required?
Yes, it must be included but it is separate from both the gov wide & fund-based statements.
What are the 3 requirements to be a special purpose gov?
1) separately elected governing body. 2) It is legally independent so that it can sue, be sued, and buy and sell property in its own name. 3) Be fiscally independent of all other governments.
On the statement of activities, what is included in program revenues?
Any revenue generated by the activity, as well as any grants related specifically to that activity. This is then netted against the expense.
In troubled debt restructuring, what does the creditor do, and how do they recognize interest on the restructured loan?
They reduce the amount owed to the present value of future cash flows on the ORIGINAL interest rate. Then, they recognize interest by using the original interest rate times the BV of the new receivable. The debtor recognizes a loss as the difference between the current BV of its receivable and the present value of the future cash flows.
In troubled debt restructuring, what does the debtor do?
They compute the total cash flows now owed. So you take the future interest payments and add them to the new principal amount.
If you have an investment that isn’t enough to be equity method, then you invest more later that does take it to equity method, how is that treated?
The equity method is retroactively applied to the first amount. So if you owned 10% the whole year then bought another 20% at year end, you would recognize 10% of the company’s earnings under the equity method.
How is a capitalized interest problem done? (average accumulated expenditures)
First calculate the average accumulated expenditures. That is taking the amounts spent through the year each multiplied by the portion of the year remaining.Next you calculate avoidable interest. Avoidable interest is the interest on the construction specific loan(s), and then the amount of other debt above the amount of the construction loans.Then calculate actual interest. The lesser of the avoidable interest and the actual interest is the amount that can be capitalized.
When converting financial statements using translation, paid in capital accounts are translated using the ______ rate?
Historic rate in effect when the account arose or the investment was made.
If a firm buys land to build a warehouse on, is the interest from the land loan and the warehouse construction capitalized?
Only interest on the warehouse construction can be capitalized.
If a firm is going to discontinue a segment early next year, but there is a loss in that segment ending this year, how is that loss reported?
As an operating loss of the discontinued segment. This section is below income from continuing ops but above extraordinary items.
What is an accelerated filer and how long do they have after their fiscal year end to file their 10-K?
Aggregate worldwide market value of voting and nonvoting stock of $75 million or more, but less than 700 million. They have 75 days to file 10-K.
What is a large accelerated filer and how long do they have after their fiscal year end to file their 10-K?
Market cap of 700 million or more. They have 60 days to file their 10-K.
A foreign currency transaction is settled in ______ but measured and recorded on the US entity’s books in ________.
Non dollarsDollars.
Where are foreign currency exchange gains or losses on acc rec reported?
In current income as an item of income from continuing operations.
What disclosure is required relating to sinking funds and long term debt?
FAS 47 requires the disclosure of the aggregate amount of maturities and sinking fund requirements for all long-term debt for each of the five years following the balance sheet date. The detail of each year for both is shown.
When does a liquidating dividend occur?
When the investee pays more income than was earned during the period the investor owned the shares of the investee.
Describe the cost method:
The cost method is for an investment that DOES NOT give the investor significant influence. The dividends are recognized in income of the investor. The investment remains on the balance sheet at cost unless there is a permanent decline in value, or there is a liquidating dividend.
