Initial Notes Flashcards
FED PRIA
FASB - statements on financial accounting and reporting EITF - Emerging issues task force Derivatives Implementation Group APB - Accounting Principals Board Accounting Research Board Accounting Interpretations AICPA
SEC Standards
Regulation for Accounting is Emerging - Regulation S-X; Financial Reporting Releases (FRR); Accounting Series Releases (ASR); Interpretive Releases (IR); Staff Accounting Bulletins (SAB); EITF
Enhancing Qualitative Characteristics
Comparability - consistency
Verifiability - independent confirmability
Timeliness - quarterly
Understandability - verify the information is understandable
Cost restraint - benefits exceed the cost of doing so.
Fundamental Assumptions of US GAAP
Entity Assumption - separate corporation/division is necessary when required;
Going concern assumption - corp does not end at death of key members
Monetary Unit - deal in currency most often associated w/ business operations
Periodicity assumption - yearly/quarterly, etc:
Historical cost principal - cost, not current market value (most assets, not all)
Revenue recognition assumption - earned & realized (been paid)/realizable (accrual, expect to incur);
Matching principal - revenue and expenses
Accrual accounting - recognize revenue/gains when earning process is complete, incur expenses immediately
Full disclosure - completeness, footnotes, explanation
Rule of Conservatism - never overstate assets/revenues or understate liabilities/expenses.
IASB Fundamental Assumptions
Going Concern & Accrual Accounting.
IDEA - Order of presentation on Income Statement
I - Income from continuing operations, shown before tax (and net eventually), operating income/expenses and income from non-operating (gains and losses, equity)
D -discontinued operations (net of tax)
E - Extraordinary items (NET OF TAX unusual AND infrequent)
A - change in accounting principle, GR, change in retained earnings. (NET OF TAX change only allowed if it more fairly presents I/S)
Multiple-Step Income Statement
Reports core business separately from non-operating items.
Single-step Income Statement`
Total expenses including tax are lumped together; total revenues less total expenses.
Elements of Discontinued Operations
Net of tax - can consist of impairment loss; G/L from actual operations; G/L on disposal included in period in which they occur, not before they are sold.
HELD/Available FOR SALE
1- management commits to plan to sell.
2- immediately available to sell
3- actively marketed
4- probable sale and expected to occur w/ in a year (generally)
Available for sale - IFRS
Each asset and liability must be tested for impairment; under US GAAP, impairment is tested at the entity level.
Classification as discontinued operations “GEL”
G - disposal of major geographic area
E - disposal of major equity method investment
L - disposal of major line of business
Must be strategic shift and/or a major effect on operations
Extraordinary Items on IFRS
Not allowed under IFRS
Accounting Changes
Changes in accounting estimate - prospective change;
Changes in accounting principle - GR retrospective (GAAP to GAAP, IFRS to IFRS, required and more fairly states) if comparative are not being shown, book to RE prospectively. If comparable, have to restate all prior years;
Changes in accounting entity - restate financials
NOTE - corrections of error are not accounting changes.
changes in accounting principle inseparable from a change in estimate are made PROSPECTIVELY; no restatement of PY
Exceptions to GR on changes in accounting principle
Changes to LIFO and change in depreciation. handled prospectively
