Financial Statements Flashcards
How would you describe developing fair value methods for financial statement purposes?
You would use the highest and best use of the asset for valuation.
Does GAAP require preparation of prospective financial information?
No, it is really only used for internal purposes and seeking financing from a bank.
What is the rule for a gain or loss that comes from an event or a transaction that is either unusual OR infrequent?
The gain or loss resulting from an event or a transaction that is unusual or infrequent, but not both, should be presented as a separate component of income from continuing operations.
What is the difference between a “principle” market and a “most advantageous” market?
The principle market is the market that has the greatest volume and level of activity. The most advantageous market is the one that maximizes the price received for an asset.
ASC Topic 255 requires that the current cost for inventories be measured at…?
Current cost should be measured at the lower of current cost or recoverable amount.
What are the minimum required disclosures on the income statement for IFRS?
1) Income
2) Finance Costs
3) Share of profits and Losses using the equity method.
4) Tax expense
5) Discontinued operations.
What is the market risk?
The risk that the value of an investment will change due to economic changes.
What is the off sheet balance-sheet-risk of accounting loss?
It refers to a credit risk associated with off-balance sheet items such as loan commitments, financial guarantees, and standby letters of credit.
What is the concentration of credit risk?
The risk of loss due to a particular borrower’s nonpayment of a loan.
What is the risk of measurement uncertainty?
The risk of using estimates in the preparation of financial statements.
What are the four areas of risk disclosure?
- Use of estimates in financial statement prep
- Nature of Operations
- Current vulnerability due to concentrations
- Use of certain significant estimates
