Interim Reporting

Question 1

Interim Financial Statements emphasize

Answer 1

Timeliness over reliability

Question 2

Cost of goods sold exceptions

Answer 2

1. Gross profit method may be used to estimate COGS and ending inventory for each interim period.
2. Temporary declines in inventory market value need not be recognized (lower of cost or market, inventory doesn’t have to be marked down if you think it’s just temporary.)
   if the loss is permanent should not be deferred beyond the interim period in which the loss occurs.

Question 3

All other costs and expenses exceptions

Answer 3

Expenditures which clearly benefit more than one interim period may be allocated among periods benefited.

Question 4

Income Taxes

Answer 4

Year to date income x estimated annual effective tax rate - expenses recognized in previous quarters.

Use the annual effective tax rate (the rate that you think will be in place for the entire period

Question 5

Discounted operations

Answer 5

Recognized in the interim period as incurred

Question 6

Extraordinary items

Answer 6

Recognized in the interim period as incurred. Materiality is evaluated based on expected annual results

Question 7

Change in accounting principal

Answer 7

Retrospective application. Cumulative effect of change reflected in the carrying amounts of assets and liabilities as of the first period presented with offsetting adjustment to retained earnings for that period. Financial statements are adjusted for period-specific effects of the change.

Question 8

Disclosure

Answer 8

Key disclosure item for interim financial reporting is the seasonal nature of the firms operations.
Income tax expense is estimated each period using an estimated annual effective tax rate.

Question 9

Interim reporting - IFRS

Answer 9

Not mandated 
When they are required 4 financial statements:
The statement of financial position 
the statement of comprehensive income 
the statement of changes in equity
statement of cash flows.