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FAR > General Purpose Financial Reporting: For-Profit Business Entities > Flashcards

General Purpose Financial Reporting: For-Profit Business Entities Flashcards

1
Q

If losses are expected in the next year from a discontinued operation to be disposed of, will those expected losses be recorded in the CY income statement?

A

Expected operating losses from discontinued operations are not included in financial statements until they occur.

Note: an expected disposal loss may be indirectly recognized through impairment testing ( and written down as a component to fair value)

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2
Q

Investing activities include
(4)

A
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3
Q

What are the rules required to record a chartiable contribution expense.

A
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4
Q

If a parent owns less than 100% of the subsidiary, noncontroling interst is reported on __________ under ___________

A

Balance sheet under stockholders equity.

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5
Q

List all the operating Activities (DAGLE CACL)

A

ADD:
Depreciation
Amortization Bond Discount
Losses from sale of asset
CA Decreases
CL Increases

Subtract
Equity Earnings in Investment
Amortization Bond Premium
Gains from sale of asset
CA Increases
CL Decreases

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6
Q

What are Monetary vs Nonmonetary Items

A
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7
Q

Should cash flows per share be reported on a statement of cash flows?

A

Unlike the income statement, which requires earnings per share to be reported, the SCF may not disclose the Cash flows per share, bc that could be misinterpreted by users as a measure of performance and amount they think could be paid out.

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8
Q

Prior period Adjustments cannot be made to Net income. They must be recorded to _______

A

Retained Earnings

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9
Q

List the components in the Multistep income statement

A
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10
Q

Calculate income from discontinued operations net of tax __________ from income from continuing operations, then add to net income.

A

Calculate income from discontinued operations net of tax SEPERATELY

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11
Q

Mortgage repayments and bonds payable issued are ________________ activities

A

Financing activities.

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12
Q

When calculating Accumulated AOCI, what should you do with pension prior service costs

A
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13
Q

Would conversion of debt to equity be disclosed as supplemental info in the statement of cash flows?

A

Yes

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14
Q

What are the Single Step Components vs Multistep income statement

A
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15
Q

Is Accumulated depreciation recognized on the SCF indirect or direct method?

A

Never. Only Depreciation

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16
Q

Where would borrowings under a line of credit go on indirect SCF

A

Financing activities

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17
Q

How should amortization of bond discount on long-term debt be reported in a SCF indirect method?

A

Operating section - add to net income

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18
Q

Proceeds from bond payable sold at a premium go on what section of SCF

A

Bonds payable sold (ie issued) by a company, cash proceeds go on financing section regardless sold at disc/premium

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19
Q

OCI (Other comprehensive income) are transactions that have _______ _______ __________

A

have not been realized

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20
Q

Fix this card

Examples of significant noncash investing and financing activities

Significant noncash activities are reported separately, either as an 1) operating activity reconciliation (i.e. property dividend received)
2) on Schedule of noncash investing and financing activities (i.e. property dividends paid)

A
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21
Q

When a company owns more than 50% of voting stock of another company, the intercompany transactions must be __________________

A

Eliminated. In consolidation, intercompany transactions are eliminated to avoid double counting of assets.

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22
Q

In the SCF, If equipment is sold, the total sales price is recorded in ________ activities and the gain/loss is recorded in ________ separately. No netting together

A

If equipment is sold, the total sales price is recorded in investing activities and the gain/loss is recorded in operating separately. No netting together

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23
Q

Summary of Significant accounting policies examples for disclosures(BRIDUIFIF)

A
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24
Q

OCI ? (DENT)

A
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25
Q

In the SCF, Prepaid rent changes are included in ______ activities. Also whats the treatment for AL4DA in those activities?

A

Prepaid rent is a current asset so its treated in operating activities. Add back to NI if prepaid rent decreased, subtract from NI if increased.

AL4DA (or allowance for credit loss) is a contra asset. Add back any increases like CL.

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26
Q

Major repairs capitalized are what activity?

A

Investing

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27
Q

Whats the difference between foreign currency translation and transaction?

A

Translation is concerned with financial statements expressed in foreign currency translated into domestic, not the treatment of individual transactions.

28
Q

Equation for Parent using equity method, adjusting the CV of its investment in Sub

A

Begining CV = Cost
+ % of NI
- % excess depreciation
- % of dividends
= End CV inv in sub

29
Q

When a parent owns a subsidiary: The consolidated dividends declared represent those attributable to the parent company. All subsidiary dividends are eliminated, regardless of the parents ownership percentage

A

When a parent owns a subsidiary: The consolidated dividends declared represent those attributable to the parent company. All subsidiary dividends are eliminated, regardless of the parents ownership percentage

30
Q

Goodwill is the difference between the ________ and the _______ of net assets

A

purchase price , fair value

31
Q

What are financial instruments

A

Financial instruments are any monetary contract, (ie cash, stock, security) and whether recognized or unrecognized, must have their fair values disclosed, if practicable to estimate, and if they are material.

32
Q

purchasing common stock is an ____ activity

A

investing activity

33
Q

List the 6 noncash operating activities and their treatment

A
34
Q

What are the non operating items in a multistep income statement. IDEAL GU

A
35
Q

SIM Good will

A
36
Q

What is the general rule for the consolidation method, and how does it apply to a 70% ownership scenario

A
37
Q

1 & 2

A
38
Q

Calculations for consolidated equipment and common stock

3-4

A
39
Q

Treatment of Investments and DIvidends in Consolidations
5-6

A
40
Q

Calculate the amounts that appear on Parents consolidated statements.

7-8

A
41
Q

Row 2-3

A
42
Q

Record activity in operating, investing, or financing flow for Dec 31, Year 2.

(Row 4-5)

A

decrease in note receivable = 60k received in cash, added

-20k spent investing activity. 30k supp discl for stock issuance

43
Q

Row 6-7

A
44
Q

Q3, 1-2

A
45
Q

Adjust the business’s unajusted trial balance to reflect the activity

A
46
Q

Adjust the business’ unajusted trial balance for the activities

6-7

A
47
Q

Two Statement Approach

A
48
Q

Whats included in OCI

A
49
Q

Where are gains or losses from discontinued operations placed in financial statements?

A

Discontinued operations are placed in a separate category after income from continuing operations, not under other income or loss.

50
Q

Are gains or losses from extraordinary items disclosed in the income statement after discontinued operations?

A

No, the classification “extraordinary item” no longer exists under GAAP.

51
Q

How are exit and disposal activities classified in financial statements?

A

Exit and disposal activities not related to discontinued operations are reported as unusual or infrequent income/loss within income from continuing operations, before income taxes.

52
Q

When can a component of a company be classified as discontinued?

A

A component is classified as discontinued when it meets the criteria for being held for sale.

53
Q

How are corrections of errors presented in financial statements?

A

Corrections of errors require restatement of the financial statements, not inclusion in the cumulative effect of a change in accounting principle.

54
Q

Where can Other Comprehensive Income (OCI) be presented?

A

Other Comprehensive Income can be presented at the bottom of the income statement or in a separate statement, depending on the chosen format. Flexibility is allowed for presentation

55
Q

Are separate EPS amounts required for Other Comprehensive Income (OCI)

A

No, separate EPS amounts are only required for:

- Continuing operations

- Discontinued operations

- Cumulative effect of accounting changes

56
Q

What information must be included in prospective financial statements?

A

Notes to prospective financial statements must include statements, assumptions, and significant accounting policies.

57
Q

Where on IS or Equity section are these reported?

A
58
Q
A
59
Q

What are the reported amounts for the newly consolidated

A
60
Q

Last question, consolidate financial statements

A
61
Q
A
62
Q

How do you eliminate intercompany gains and adjust depreciation for an intercompany sale of equipment?

A
63
Q

What are the elimination JEs for #2

A

Fix this card

64
Q
A
65
Q

What should be reported in Tulip/Daisys Cost of Goods Sold in the consolidated statement of net income?

A
66
Q

Whats the value despite the noncontrolling interest

A

FAR (23 decks)

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