FSA Flashcards

Question

Fixed Asset Turnover formula G or Loss on Sale

Answer 1

1) net sales/avg net PLT 2) Sale proceeds-(Acquisition Cost -Accumulated Depreciation) Accumulated Depreciation= [(Acq cost-Residual value)/ useful life] x used years

Answer 2

- In a declining price environment, the newest inventory is the lowest- cost inventory. - In such circumstances, using the LIFO method will result in lower cost of sales and higher profit. - In the rising market, the inventory balances will be higher for the company using the FIFOA method .

Answer 3

- checked annually for impairments - not amortizated - in a business combination, the excess of the purch price over and above the F VALUE of identifiable assets and liabilities acquired.

Answer 4

Total Revenue/ Avg Net Fixed Assets

Answer 5

Identifiable because they incur amortization. Cost (opening amounts) accumulated amortization/ carrying value Total carrying value= C Value Group1+ Group2

Answer 6

If CV is > then Recoverable amount => Impaired Value -recoverable amount is whatever the largera of FV-Cost or value of Future CD discounted.

Answer 7

1) If undiscounted CF< CV => Impairment 2) CV- Fair Value= impairment

Answer 8

IFRS: • Reverse: Record a credit in income stat • increase asset carrying value (B|S)- previous amount • can only reverse up to previous carrying amount • held for use or helf for sale losses csn be reversed. US GAAP • impairments are permanent • cannot reverse • only held for sale

Answer 9

1) Identifiable (separate from company, Goodwill) 2) Under the control of the company 3) Expected to generate future, economic benefits -Probable that the expected, future economic benefit benefits, will flow to the company - Cost of asset can be realiably measured

Answer 10

Under the IFRS, the reversal of write downs is required if net realizable value increases. The inventory will be reported on the BS. Inventory is reported at the lower cost or net reliable value. USGAAP does not permit the reversal of write- downs.

Answer 11

LIFO not allowed No reversal permitted Inventory is measured as lower of cost or market value. ( subject to ceiling of an NRV and a floor NRV less a normal profit margin) MV is defined as current replacement cost

Answer 12

Inventory is measured at the lower of cost on NRV. If the cost exceeds NRV, the inventory is written down to NRV and the difference increases COGS. Subsequent increases in NRV recognized and reduced cost of sales in the income statement (reversal). Value inventory at lower of cost and net real reasonable value.

Answer 13

Instead of disclosing cash flows by type, CFO is calculated by adjusting 1) net income for non-cash items and 2) changes in operating working Items (accruals)z

Answer 14

LIFO + Lifo Reserve= FIFO Lifo: COGS increase- Profit decrease- Recent Expenses Inventory deceease- Old-cheap During periods of rising inventory unit costs, a company using FIFO method rather than LIFO, will have a lower inventory turnover. FIFO- COGS old Cheap(decrease) Deficit (Increase)

Answer 15

During writing prices, FIFO companies will have the cost of sales representing units purchased at (no longer available) lower price, lower, gross profit, lower inventory, higher cost of sales. Inventory balances during price rising will be higher for the company using this method. For LIFO companies, it’s cost of sales is approximately equal to the current replacement cost of inventory.

Answer 16

COGS/ Avg Inventory

Answer 17

Under IFRS dividends received can be classified as either an operating or investing activity, but not as a financing activity.

Answer 18

If a deferred tax asset or liability resulted in the past, but the criteria of economic benefits is not mad on the current balance sheet date, under IFRS, un existing differ tax, asset or liability related to the item will be reversed. Under US GAAP, a valuation allowance is established.

Answer 19

The higher of its fair value - cost to sell and its value in use. Value in use is a discounted measure of expected future cash flows. Recov amount= MAX(FV -Cost, Value in Use): MAX[(1700-50);1500]=1650 => Impairment loss= carrying amount-recoverable amount= 2000-1650=350

Answer 20

The carrying amount of an acid being higher than its tax base is considered to be a temporary difference that results in a deferred tax liability. Deferred tax liabilities, which also appear on the balance sheet, arise when the deficit amount is paid for income taxes and the company expects to eliminate the deficit over the course of future operations.

Answer 21

Total debt/ total asset

Answer 22

Sales-carrying amount of the asset. CF from sale= sale proceeds=(purchase price - accumulated depreciation) + gain on sale