Financial Reporting

Question 1

10-Q Accelerated or Large Filer

Answer 1

Both large accelerated and accelerated filers have 40 days to issue the report

Question 2

10-Q NON Accelerated or Large Filer

Answer 2

45 days

Question 3

Exercise stock rights in excess of Par impact

Answer 3

That portion of proceeds in excess of stocks’ par value is credited to “additional paid-in-capital” at the time the rights are exercised. No impact to Net income

Question 4

Under U.S. GAAP, earnings per share data should be reported for

Answer 4

Discontinued operations and Income from continuing operations

Question 5

Unrealized losses in an available-for-sale equity securities portfolio

Answer 5

must be included in net income in the quarterly income statement

Question 6

When prior service costs associated with a company pension plan are initially recorded, they will reduce other comprehensive income. But as they are amortized, other comprehensive income (and as a by-product, accumulated other comprehensive income)

Answer 6

Will increase

Question 7

The acquisition of treasury stock at a price less than their book value will

Answer 7

1) Decrease stockholders’ equity in total. All treasury stock transactions decrease total equity.

2 Increase BV per share

Question 8

OCI=

Answer 8

PUFI- Pension loss added back.

Question 9

Impairment Gain/loss

Answer 9

Book value-sold value. BV = Net assets/Liabilities

Question 10

Income Tax Benefit/(Expense)

Answer 10

Benefit recorded if a loss, Expense recorded if Net income times tax rate

Question 11

Basic EPS=

Answer 11

Net income minus Preferred dividends/ WA common shares

Question 12

Diluted Test

Answer 12

Less than basic EPS

Question 13

Diluted Convertible Bond

Answer 13

Net interest by Tax if problem mentions tax rate

Question 14

Par Method(BuyBack)

Answer 14

TS(Par), APIC(Original APIC), RE(PLUG)

Question 15

Par Method(Resell)

Answer 15

TS(Par), APIC(PLUG)

Question 16

Cost Method(BuyBack)

Answer 16

Cash & TS. No APIC

Question 17

Cost Method(Resell)

Answer 17

TS= Shares times buyback price. RE a plug

Question 18

Out of the money stock options are antidilutive

Answer 18

because the exercise price exceeds the market price of the stock.

Question 19

When the purpose of the appropriation has been achieved,

Answer 19

it should be restored to unappropriated retained earnings.

Question 20

Per GAAP, initial direct costs must be added to the

Answer 20

finance lease asset at lease inception

Question 21

When a permanent impairment occurs, the book value is reduced and a loss is recorded. The loss is credited to

Answer 21

accumulated depreciation

Question 22

Which U.S. GAAP inventory costing method would a company that wishes to maximize profits in a period of rising prices use?

Answer 22

Under FIFO, the first costs inventoried are the first costs transferred to cost of goods sold. In a period of rising prices, FIFO results in the lowest cost of goods sold and the highest net income.

Question 23

The lease is for three years and the economic life of the equipment is four years. The lease contains a written purchase option which Besser intends to exercise. Over how many years should Besser amortize/depreciate the lease asset/equipment?

Answer 23

The lease asset/equipment should be amortized/depreciated over the period of expected benefit. Since Besser intends to exercise the purchase option, the amortizable/depreciable period is four years.

Question 24

Cash equivalents must mature in __ days or less at the date of purchase.

Answer 24

90

Question 25

Term bonds are issued with

Answer 25

single fixed maturity date

Question 26

Contra asset treatment on the operating cash flow

Answer 26

Treat as liability... ex prepaid

Question 27

Annuity Due vs Ordinary annuity

Answer 27

Annuity Due(beg of month) vs Ordinary annuity(End of month)

Question 28

Special revenue

Answer 28

Special revenue funds are set up to account for revenues from specific taxes or other earmarked sources that are restricted or committed to finance particular activities for a government.

Question 29

Permanent

Answer 29

Permanent funds are used to report resources that are legally restricted to the extent that income, and not principal, may be used for purposes that support the reporting government's programs.

Question 30

Enterprise

Answer 30

Enterprise funds are set up to account for the acquisition and operation of governmental facilities and services that are intended to be primarily self- supported by user charges.

Question 31

Capital project

Answer 31

Capital projects funds are set up to account for resources used for the acquisition or construction of major capital assets by a governmental unit, except those financed by proprietary or fiduciary funds.

Question 32

Internal service

Answer 32

Internal service funds are set up to account for goods and services provided by designated departments on a fee basis to other departments and agencies within a single governmental unit or to other governmental units.

Question 33

Custodial

Answer 33

Custodial trust funds account for resources in the temporary custody of a governmental unit. Fees are accounted for as a liability to another fund.

Question 34

Generally, which U.S. GAAP inventory costing method approximates most closely the current cost for each of the following?

Answer 34

Cost of goods sold - under U.S. GAAP, LIFO most closely approximates the current cost for cost of goods sold because inventory "last-in" (most recently purchased) is "first-out" (expensed currently). Ending inventory - FIFO most closely approximates the current cost for ending inventory because inventory "first-in" (oldest purchases) is "first-out" (expensed currently) and the most recent purchases remain in ending inventory.

Question 35

When the current market value of the inventory is less than the fixed purchase price in a purchase commitment, the loss must be recognized at the time of the decline in price,

Answer 35

a liability must be recognized on the balance sheet and a description of the losses must be described in the footnotes.

Question 36

If a bargain purchase option is included in ROU lease, which term should you use for amortization?

Answer 36

Useful life

Question 37

ARO

Answer 37

Legal obligation of retirement of tangible long lived assets that result from the acquisition, construction or development of long lived asset except for certain lease obligations Cum Accretion + Cum Depreciation=ARO Beginning AR * Risk Adjusted Rate=Accretion Expense

Question 38

Definition of ARO liability req

Answer 38

"1)Duty of Responsibility 2)Little or no discretion to avoid 3)Obligating event"

Question 39

Exit/Disposal costs

Answer 39

"1) involuntary termination 2) cost to terminate a contract not a lease 3)Relocate or consolidate facilities"

Question 40

Land Costs

Answer 40

Include costs for getting ready for use

Question 41

Capitalized interest

Answer 41

based on Weighted average of expenditures

Question 42

Proceeds from the sale of a building

Answer 42

reduces costs of land

Question 43

When the CV is > undiscounted Future cash flows,

Answer 43

Impairment is CV minus FV

Question 44

When the CV is < undiscounted Future cash flows, NO impairment

Answer 44

No impairment

Question 45

Preferred stock ownership does not allow the investor to exercise influence, so the preferred stock investment is accounted for using the fair value method and the preferred stock dividends of $60,000 are recorded as dividend revenue on the income statement.

Answer 45

Preferred stock ownership does not allow the investor to exercise influence, so the preferred stock investment is accounted for using the fair value method and the preferred stock dividends of $60,000 are recorded as dividend revenue on the income statement.

Question 46

What is true?

Answer 46

The individual components of other comprehensive income may be either reported on a before tax basis with an aggregate tax amount reported after these items or individually on a net of tax basis

Question 47

Loans to other entities and the consequent collection of the loans are reflected in the _______ activity section of the cash flow statement.

Answer 47

investing

Question 48

Purchasing Treasury stock increases or decreases Stockholder's Equity?

Answer 48

Decreases Equity because it represents a reduction in outstanding shares.

Question 49

Selling Treasury stock increases or decreases Stockholder's equity?

Answer 49

Increases equity as it increases cash and decreases TS

Question 50

Small Stock Dividend JE(<20-25%)

Answer 50

FMV is transferred from RE to Capital stock and APIC DR-RE CR-CS CR-APIC No impact to Equity