Farr ultimate review Flashcards
Module 6 re-review
Amounts paid for interest in cashflow statement using indirect method with a non for profit is reported how
As a supplemental disclosure for the cash flow information.
Cash received for construction of building is classified as how for non for profit cash flows?
financing activities
Government Wide financial statements are reported using what basis
Accural basis for government and business type actiivties
The journal entry to record assets held in a charitable trust
DR. Assets held in a charitable remainder trust
CR. Liability under trust agreements. 84,250
CR.Contribution rev with donor restrictions.
Remember acquiring equipment with funds has to do with statement of
equity within net assets not revenues
TBS Hints for releasing funds
All expenses are expenses without donor restrictions
To calculate a matching requirement
Take the amount they will give. Divide it by the percentage that their match should not exceed then take the percentage of that to get the match requirement,
Any time you see the word contingent
know that has to be not classified as net assets
Anytime you see unconditional over the next amount of years
Its donor restriction because it would be subject to the passage of time.
Interest paid and increase in capital lease payable are what activities on the statement of cash flows
They are both supplemental diclosures not in specific categories
Operating activities and whether they are outflows or inflows
increase in accrued interest payable is an increase.
decrease in accounts payable is a decrease
increase in deferred tax liabilities is an increase
An investing activites
purchase of a bonds paayble cash outflow from investing
Finaancing inflow and outflow
Proceeds from issuance of lomg term debt is an inflow and an outflow is payments on long term debt
When forming a partnership
assets contributed are recorded at fair value.When a new partner is admitted by bonus the amount credit is not equal to the asset contributed,it is calculated so the new partner received the proper percentage. Even if the partnership has a loss if 50k is allocated for salary each year to each partner in profit and loss it should still show that allocation
If you have a deffered tax aasset in your current year
then in that current year financial income is less than taxable income
When trying to get back to net income when given items from operations
subtract out depreciation and impairment. Do the opposite of what you do for operations subtracting what you add back.
When a company owns less than 20% of the voting stock of another company
Then you use the fair value through net income method earnings of the investee are not recorded and dividends are recorded as income not investment the investment would be recorded at the fair value
When the indirect method is used what disclosure is not required
you dont have to record a disclosure for reconciliation of net income to net cash provided by operating activities
marketable securities both short and long term are recorded at
carrying amount not fair value
When calculating cost of sales in a consolidation between two companys
pay attention to any intercompany sales and remove them
To calculate what a new partner needs to contribute
first calculate the fair value the assets less any accounts payable/. Then multiply their percentage times that plus their name contribution
For instance assets 700-120 ap =580 fair value
if partner wants to be 20%
set up as follows
.2(580,000+partner contribution)
=116+.2X Partner contribution=Partner contribution
=1partner contribution -0.2 partner contribution =0.8 partner contributionthen 116,000/0.8=145,000 partner should contribute
Financing cash inflows and outflows
outflows dividends paid
inflows issuance of common stock
inflows borrowing under a line of credit
inflow proceeds from issuance of convertible bonds
Cash flows from investing
proceeds from sale of building
revenue with stock in investment in another company
record the net income for your share in corporation if greater than 20 then add the dividends received.Stock splits are retroactively so adjust as such then multiply by the total stock by your ownership to get your share of net income
For a wholly owned subsidiary to determine current assets with regard to them
take the amount of merchandise purchased from them that is the denominator take the amount of inventory still on hand that is the numerator this gives you a percentage multiply this by the gross profit of wholly owned subsidiary to get amount of current assets you need to eliminate or subtract out.
Undervalued asset amortization and cash dividends from investee affect the what?
Undervalued asset amortization affects the investment revenue account an income statement account while cash dividends only affect the investment account a balance sheet account but not revenue account.
Undervalued asset amortization and cash dividends journal entry
For underrvalued asset amortixation
Debit investment revenue income statement account credit investment account balance sheet
for cash dividends
debit cash dividends balance sheet
credit investment account balance sheet
Obtaining caash resources from owners and providing them with an ROI is what type of activity
Financing
Cash effects of making and collecting loans is what type of activity
It is a investing activity
If you investment in subsidiary is less than 20%
fair value is used and therefore you would never credit investment in sub to reduce that would only be used when equity account is being used