Fin - reporting Flashcards
Choice of method - Investment, Equity, Acquisition differences in NI and A,L etc
NI same for all.
Assets, Liabilities, equity, revenues and expenses are high under acquisition compared to equity
Investment - HtM, AVS, HFT differences
HtM - at cost on balance sheet; interest and realized gain/losses on IS
ASF - at Fair Market Value with unrealized gains/losses in equity on the balance sheet (other comprehensive income); dividends interest, realized gains on IS
HFT - at FMV; dividends, interest, realized and unrealized gains/losses on IS
Designated as fair value - like held for trading
IFRS -vs GAAP Unrealized FX gains on available for sale debt securities recognized where?
on available for sale debt securities recognized on income statement under IFRS and OCI under US GAAP
IFRS vs - GAAP good will
IFRS permits either the partial goodwill or full goodwill methods to value goodwill and non controlling interests. GAAP requires the full goodwill method.
Pension Accounting PBO components 4
current service cost, interest cost, actuarial gains/losses, benefits paid
Calculate funding status
Funding status = plan assets - PBO = Balance sheet asset (liability) under GAAP and IFRS
Self contained sub , functional does not equal presentation - Current rate Assets/Liabilities Common Stock Income statement Exposure Dividends
Assets/Liabilities at current rate Common Stock at Historical Income statement at average rate Exposure = Shareholders equity Dividends at rate when paid
Functional = presentation currency - temporal monetary assets/liabilities non monetary assets/liabilities Sales SGA COGS/Deprecation Exposure
monetary assets/liabilities at current rate
non monetary assets/liabilities at historic rate
Sales SGA - at average rate
COGS/Deprecation - at historic rate
Exposure = monetary assets - monetary liabilities
Beneish model
used to detect earnings manipulation based on eight variable
High Quality Earnings are what
- Sustainable: expected to recur in future
2. Adequate: cover company’s cost of capital
IFRS vs GAAP: reclassification of passive investments
IFRS - restricts reclassification into/out of FVPL
US GAAP no restrictions
IFRS vs GAAP: impairment losses on passive investments, allowed?
IFRS - reversal allowed if due to specific event
US GAAP no reversal of impairment losses
IFRS vs GAAP: fair value accounting, investment in associate, allowed?
IFRS - only for venture capital, mutual funds, etc
US GAAP Fair value accounting allowed for all
IFRS vs GAAP: Good will impairment process
IFRS 1 step (recoverable amount vs carrying value)
US GAAP 2 steps identify; measure amount)
IFRS vs GAAP: Acquistion method contingent asset recognition, recognized?
IFRS - Contingent assets are not recognized
US GAAP Recognized; recorded at fair value
IFRS vs GAAP: Prior service cost
IFRS - Recognized as an expense in P&L
US GAAP - Reported in OCI amortized to P&L
IFRS vs GAAP: Actuarial gains/losses
IFRS re measurements in OCI and not amortized
US GAAP OCI, amortized with corridor approach
IFRS vs GAAP: Dividend/Interest income and interest expense
IFRS Either operating or financing cash flows
US GAAP - must classify as operating cash flow
Accruals Ratio Balance sheet
= (NOAend - NOAbeg)/[(NOAend + NOAbeg)/2]
Accruals ratio - The lower the ratio, the higher will be the earnings quality.
Accruals Ratio Cash flow
= (NI - CFO - CFI)/[(NOAend + NOAbeg)/2]
Accruals ratio - The lower the ratio, the higher will be the earnings quality.
Reclassification into/out of held-for-trading
differences for IFRS and USGAAP
Under the current standards, IFRS typically does not allow reclassification of investments into and out of fair value through profit or loss category and reclassification of investments out of held-for-trading category. U.S. GAAP does permit securities to be reclassified into or out of held-for-trading or designated at fair value.
Persistence Factors - High/Low
A high persistence factor will be associated with low dividend payments, which is exactly the case with Schubert.
A low persistence factor will be associated with significant levels of nonrecurring items. However, Schubert has very few nonrecurring items (which would suggest a high persistence factor).
Beginning PBO to Ending PBO inputs
Beginning PBO \+Current Service Cost \+Past Service Cost \+Interest Cost - Actuarial Gain or + loss -Benefits Paid = Ending PBO
Ending fair value of assets
Ending = beginning fair value + contributions + actual gains - benefits paid
