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
Comprehensive Income (non owner transactions) - PUFER
Pension adjustments
Unrealized gains and losses (AFS Securities)
Foreign currency items (translation adjustments)
Effective portion of cash flow hedged
Revaluation surplus (IFRS only)
IFRS - Full goodwill and partial goodwill definition when dealing with non-controlling interest
Full goodwill: NCI= FV of sub * NCI percentage
Partial goodwill: NCI= FV of subs net identifiable assets * NCI percentage
Acquisition method JE components
C -common stock of sub (eliminate) Dr APIC - addtnl paid in capital (eliminate) Dr R - R/E of sub (eliminate) Dr I - Investment in sub (FV purchase) Cr N - noncontrolling interest (if not 100%) Cr., remember full/partial goodwill method B - Balance sheet of sub to FV Dr. I - identifiable intangibles Dr. G - goodwill or gain (Dr. or Cr.)
OWNS - GAAP capital lease criteria
O - ownership transfer at end of term
W - written option for bargain purchase
N - 90% of leased property FV
S - 75% of useful life
OWESFACS - IFRS
O - ownership transfer
W - written bargain purchase option
E - Lease term is major part of economic life of asset
S - PV min lease payments amounts to @ least substantially all of FV
F - G/L from fluctuation in FV of residual accrual to lessee
A - lessee has the ability to continue lease for 2nd period
C - lessee can cancel the lease, lessor’s losses borne by the lessee
S - specialized nature, only lessee can use them w/ out modification
LUC - lessor, sales type/ direct financing lease criteria (GAAP)
L - lessor “owns” the leased property
U - uncertainties do not exist regarding un-reimbursable costs by the lessor
C - collectability of the lease payments is reasonably predictable.
Governmental Funds: GRaSPP
G - General Fund (general tax revenue)
R - Special Revenue Fund (specific taxes)
and
S - Debt Service Funds (payment of interest and principal on all general obligation debt)
P - Capital projects funds (assigned for construction/major capital assets)
P - permanent fund (legally restricted for public use)
Governmental Funds: MAC GRASPP
Modified Accrual Accounting; Current Financial Resource Measurement Function -
G - General Fund (general tax revenue)
R - Special Revenue Fund (specific taxes)
and
S - Debt Service Funds (payment of interest and principal on all general obligation debt)
P - Capital projects funds (assigned for construction/major capital assets)
P - permanent fund (legally restricted for public use)
Gov’t. Proprietary Funds: full accrual - treat like customer/not citizen - SE
S - Internal Service Funds
E - Enterprise Funds
Gov’t. Fiduciary or Trust Funds - PAPI
P - pension or other EE trust benefit fund
A - Agency trust fund
P - Private purpose trust funds
I - investment trust fund
Gov’t. Fiduciary or Trust Funds - PAPI (ACE)
P - pension or other EE trust benefit fund
A - Agency trust fund
P - Private purpose trust funds
I - investment trust fund
Accrual accounting; Carry fixed assets and LTD; Economic resources measurement focus.
Governmental Funds: MAC GRASPP
Modified Accrual Accounting; Current Financial Resource Measurement Function -
G - General Fund (general tax revenue)
R - Special Revenue Fund (specific taxes)
and
S - Debt Service Funds (payment of interest and principal on all general obligation debt)
P - Capital projects funds (assigned for construction/major capital assets)
P - permanent fund (legally restricted for public use)
No fixed assets, no non-current liabilities are reported
Gov’t. Fiduciary or Trust Funds - PAPI (ACE)
P - pension or other EE trust benefit fund
A - Agency trust fund
P - Private purpose trust funds
I - investment trust fund
Full Accrual accounting; Carry fixed assets and LTD; Economic resources measurement focus.
BAE - BAE
Book the budget
Book Activity
Book encumbrances
Close the budget
Close Activity
Close Encumbrances
BAE - BAE
Book the budget
Book Activity
Book encumbrances
Close the budget
Close Activity
Close Encumbrances
Close to the Balance Sheet and amounts roll forward to the next year
BAE - BAE, used with which Gov’t funds?
GRaSPP funds
Book the budget
Book Activity
Book encumbrances
Close the budget for same amount as booked
Close Activity for same amount as booked
Close Encumbrances for same amount as booked
Close to the Balance Sheet and amounts roll forward to the next year
Functional program, organizational unit, activity
Public safety - police & fire - drug enforcement/traffic/etc.
