Flashcards: F4 - F7
GAAP Refinanced before F/S issuance
Book as non-current
IFRS Refinanced before F/S issuance
Leave as current until refinanced
Restricted Cash Classification
To pay current = Current Cash; To pay non-current = Noncurrent Cash
Apply A/R Trade Discounts
Apply discount % first and then 2nd % discount on balance
A/R Expected Returns
Book nothing; only book allowance % based on past experience
Allowance for Doubtful Accts Entry
DR: Bad Debt CR: Allowance for Doubtful Accounts
W/O Specific Bad Debt Entry
DR: Allowance for Doubtful Accounts CR: Accounts Receivable
A/R Subsequent Cash Collections
GAAP: Reverse W/O DR: A/R CR: Allowance, Book Cash: DR: Cash CR: A/R
Pledging A/R as Collateral Entry
Footnote Disclosure Only
Pledging A/R w/Recourse
Footnote Disclosure Only
Pledging A/R w/out Recourse
Book sale as final; book loss on sale to I/S
Perpetual vs. Periodic
Perpetual = continuous, Periodic = at end of period, FIFO same for both
Calculate Moving average Inv. Cost
Compute weighted avg. after each purchase
Calculate Price Index Inv. Cost
(End Inv. @ Current/End Inv. @ Base) x Base - LIFO
Capitalize Add, Impr to Equip
Usefulness Incr = Incr Asset; Life Extended = Reduce Accum Depr.
Capitalize Land Costs Except
All costs up to the digging (excavation)
Treatment Land Improvements
Capitalize and depreciate
Capitalize Building Costs
Excavation forward; Purchase, neglected repairs, improvements, architecture
IFRS Investment Property Treatment
Capitalize @ Cost less depr. OR book @ Fair Value no depr.
Construction Interest
Cap. during construction only; use weighted avg. expenses to calculate int.
Sum of Years Depr.
N(N+1)/2 = sum all years, highest year 1st divided by sum of years x base (cost - salvage)
Declining Balance Depr.
2/N(years) x NBV (ignore salvage)
Asset Impairment Test
GAAP: Step 1 - Undisc. Cash flow
Calculate GAAP Asset Impairment
Step 2: Fair Value or Disc. Cash Flow minus carry value
Capital Lease Requirements (Buyer)
OWNS - N=90% FV
Capital Lease Requirements (Seller)
All the LUC -Lessee OWNS, no Uncertainties, reasonable Collectibility
Amount to Cap. Lease
Lessor of: FV or PV future lease payments (cost or market)
Sales-Type Financing
(2) Profits: Gain on Sale(FV > cost to lessor) AND Monthly Interest earned
Direct Financing
(1) Profit: Monthly Interest Earned only
What interest used in Lease Calc
Lessor of: Inplicit and inceremental interest rate
Cap. Lease Deprecation Life
O&W = Asset Life N & S = Lease Life
Lessor (seller) COGS Calculation
N or S ONLY: Cost of Asset - Unguaranteed Residual Value = COGS in period sale
Sale-Leaseback: Operating Lease
Tentative gain - PV lease pymts
Sale-Leaseback: Capital Lease
Calc PV lease payments as % of FV of property: >90% Defer all, 10-90% defer up toPV pymts,
Cap. Leaseback Amortize Deferred Gain
Cap. Lease in proportion to amort. Asset; Oper. Lease in propoertion to rental expense
IFRS Leaseback Gain Rules
Fin/Cap. Lease = defer all/amortize over term, Oper. Lease = recognize gain now
Debenture Bond
Unsecured Bond
Bond Discount
Stated % less than market %, book asset
Bond Premium
Stated % > Market %, Book current liability (use market % to calculate PV)
Bond Issuance Costs Treatment
Reduction to carrying amount & amortized over life
Effective Rate Amortization
Calculate using market % on new net carrying value
Bond Sinking Fund
Non-current restricted cash, add divid/interest revenue
Serial Bonds
Principal payments mature in installments; like sum of digits
Convertible Bonds
(non-detachable) convert to stock; C/S & APIC Only
Warrants (option contracts) Warrants Only
(Detachable) Right to buy; Bond Liab + Warrants APIC @ FV
Warrants (option contracts) Market Value
(Detachable) Right to buy; Bond Liab + Warrants APIC (FV proportionate to both)
Extinguish Bond before Maturity
Price = Face x % Paid minus Net Carrying Value
Accumulated Benefit Obligation (ABO)
PV benefits based on current salary
Projected Benefit Obligation (PBO)
PV benefits based on future salary
SIR AGE = Net periodic pension cost
Income Statement = ‘+ S, + I, - R, + A, - G, + E (Book net of tax)
+ (S) Current Service Cost
PV benefits earned in current period
+ (I) Interest Cost
Discount rate x beginning PBO
- (‘R) Return on Plan Assets
Actual Return OR Expected Return
+ (A) Amort. Prior Service
Amortize from OCI
- (G) Gains & Losses
Diff. between expected vs actual return; IF > 10% asset or PBO, amortize
+ (‘E) Amort. Existing Net Obligation (transition)
Amortize over greater of 15 years or avg. life
Pension Prior Service Cost Treatment
Calculate Liability book to OCI and amortizeas (A)
Pension Fund Balance Sheet Calculation
Beg. (+) contributions (-) Service cost (-)Interest Cost (+) Expected Return (-) Prior service cost (+-) Gain/loss
Funded Pensions Status
Fair Value - PBO
Preferred Stock (Cumulative)
Declared - must pay before any common dividends
Preferred Stock (Non-Cumulative)
Not decalred - lose right to dividend
Quasi-Reorganization
elimit RE deficit, restate assets to FV
Treasury Stock (Cost Method)
Book at repurchase cost; APIC adjusted at reissue of shares
Treasury Stock (Par Value Method)
Book treas. Stock at Par + APIC; RE earnings adjusted if APIC zero
Property Dividends
Convert to FV and recognize gain/loss
Liquidating Dividends
In excess of RE; reduce total capital
Stock Dividends
Less than 20% book @ FV; Greater than 25% book @ Par
Compensatory Stock to EE’s
Value @ FV over vesting period DR: Comp Expense CR: APIC Options
Basic Earnings per Share
Net Income - Preferred Divid/Weighted Avg. C/S Outstanding
Diluted Earnings per Share
Basic +(add back) Int. on Conv. Securities (net of tax)/ + conv. Securities conv. to C/S
Cash Flow Investing Activities
Change in non-current assets
Cash Flow Financing Activities
Change in interest bearing debt & equity
Cash Flow Paid to Suppliers
COGS (+) change Inv. (-) change A/P = Cash to Suppliers
Cash Flow Required Supplemental Info
Interest & Taxes paid required under Indirect Method
Cash Flow Direct Method Requirement
Must complete reconciliation to Operating Income
