Financial Reporting & Analysis Flashcards
Compare finance lease to operating lease based on financial statement ratios
Finance/Operating Current ratio - lower/higher Working capital - lower/higher Asset turnover - lower/higher ROA (early) - lower/higher ROE (early) - lower/higher Debt/assets - higher/lower Debt/equity - higher/lower
Compare finance leases to operating leases from a financial statement perspective
Finance/Operating Assets - higher/lower Liabilities - higher/lower Net income (early) - lower/higher Net income (later) - higher/lower Total net income - same EBIT - higher/lower CFO - higher/lower CFF - lower/higher Total cash flow - same
Formula for LIFO reserve
FIFO inventory - LIFO inventory
FIFO inventory = LIFO inventory + LIFO reserve
What is FIFO COGS?
LIFO COGS - ΔLIFO reserve
How is inventory valued under IFRS?
Lower of cost or net realizable value, where NRV = estimated sales price - selling costs - completion costs
How is inventory valued under GAAP?
Lower of cost or market, where market is usually replacement cost and is between NRV and NRV minus a normal profit margin
What is the accounting treatment for investments of 50%?
50%: acquisition/consolidation
How are trading assets reflected on the balance sheet and income statement?
Balance sheet: fair value
Income statement: interest, dividend, realized gain/loss, unrealized gain/loss
How are available-for-sale assets reflected on the balance sheet and income statement?
Balance sheet: fair value, unrealized gain/loss
Income statement: interest, dividend, realized gain/loss
How are held-to-maturity assets reflected on the balance sheet and income statement?
Balance sheet: amortized cost
Income statement: interest, amortized discounts, realized gain/loss
How is goodwill tested for impairment under IFRS and calculated?
Carrying value > recoverable amount,
where recoverable amount is greater of FV less selling costs and PV of future cash flows
How is goodwill tested for impairment under GAAP and the loss calculated?
If carrying value of reporting unit (sum of future cash flows) > fair value of reporting unit
Then, loss = carrying value of goodwill - implied fair value of goodwill
Formula for projected benefit obligation
Service cost + interest cost + past service cost +/- actuarial loss/gain - benefits paid
Formula for periodic pension cost (economic pension expense)
Service cost + interest cost + plan amendments - actual return on plan assets
Contributions - change in funded status
Current rate method
- balance sheet
- common stock
- income statement
- dividends
- CTA
- balance sheet: current
- common stock: historical
- income statement: average
- dividends: historical
- CTA: equity
- exposure: net assets